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Business News/ Companies / Company-results/  Five things to watch out from Dr. Reddy’s Q4 results
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Five things to watch out from Dr. Reddy’s Q4 results

Dr. Reddy's Laboratories, whose earnings were largely unchanged in Q3 with 1% net profit rise, will announce its March quarter results on 12 May

Indian sales of Dr.Reddy’s are expected to be strong in the quarter. Photo: MintPremium
Indian sales of Dr.Reddy’s are expected to be strong in the quarter. Photo: Mint

Hyderabad: Dr. Reddy’s Laboratories Ltd, India’s second-largest drug maker, will announce its March quarter results on 12 May. The company reported earnings that were largely unchanged in the third quarter, with net profit rising 1% to 579.2 crore and sales up 3% to 3,967.9 crore. The fourth quarter is not expected to be any better.

Here are five things to watch out from Dr.Reddy’s Q4 results:

US generic sales: The US contributes about half of the total global generic sales for Dr.Reddy’s. The company had no new US launches in the quarter. It missed out launching several big generic drugs due to regulatory issues. The company had 79 pending abbreviated new drug applications (ANDA) in the US as of 31 December.

The earnings will depend on Dr.Reddy’s ability to hold on to the market share of its high-margin limited competition products such as Eisai’s Dacogen (decitabine), and Celgene’s Vidaza (azacitidine), Roche Holding AG’s antiviral Valcyte (valganciclovir HCl), AstraZeneca Plc’s blood pressure drug Toprol XL and anti-coagulant Fondaparinux. The company’s North America sales in the quarter ended 31 December stood at 1,941.7 crore, of which US accounts more than 90%.

Impact of FDA warning letter: The company is expected to give an update on remediation. Analysts have estimated at least a year for a resolution of warning letters from the US Food and Drug Administration over some of its manufacturing facilities. Meanwhile, sales contribution from these facilities to the US is around 10-12% of annual sales or $250 million ( 2,000 crore).

Domestic market: Indian sales of Dr.Reddy’s are expected to be strong in the quarter. According to analysts, the domestic formulation revenues are expected to grow by 15-20% aided by new launches. India sales of the company stood at 580.4 crore in the third quarter.

Russia: Sales from Russia, Dr.Reddy’s third largest market, fell 21% to 310 crore in the third quarter mainly on account of rouble depreciation and ongoing macroeconomic uncertainties in the country. Russian sales are expected to decline further.

Venezuela: Restrictions on transferring money out of the country after Venezuela ran short of foreign exchange has hurt Dr.Reddy’s as well. Sales in the Latin American country stood at $136 million in FY15, making it the company’s fourth largest market by sales. The company has been reducing its exposure to Venezuela and has $60.7 million pending for repatriation. The company is expected to take a call on a write-off.

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Published: 11 May 2016, 10:34 PM IST
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