Hyderabad: Riding on improved revenues from the US and its migraine drug sumatriptan, drug maker Dr Reddy’s Laboratories Ltd on Tuesday posted a 120% year-on-year growth in profit for the quarter ended 30 June.
The Hyderabad-based firm maintained its revenue growth forecast of 10% for 2009-10. “We don’t see any risk to the guidance,” managing director and chief operating officer Satish Reddy said.
Sales at Dr Reddy’s in the first quarter climbed 21% over a year earlier to Rs1,818 crore, shrugging away a 36% fall in revenue at its German subsidiary Betapharm Arzneimittel GmbH. Net profit jumped to Rs244.5 crore from Rs111.1 crore a year ago.
Cost control: Dr Reddy’s MD and CEO Satish Reddy. The company maintained its revenue growth forecast of 10% for 2009-10. Bharath Sai / Mint
“The growth in sales was largely driven by sumatriptan. Excluding revenues from sumatriptan, the company reported an overall year-on-year growth of 7% and 42% in sales from North America,” said chief executive G.V. Prasad.
“The businesses in the US, PSAI (pharmaceutical services and active ingredients) and India businesses did well, while the Russian business was flat and German business suffered degrowth,” said chief financial officer Umang Vohra.
Dr Reddy’s sales in Europe fell 30% over a year ago to Rs210.9 crore, dragged by its German business where sales declined to Rs161 crore from Rs252 crore earlier. In North America, revenue increased 115% over a year earlier to Rs602.6 crore, and in India by 6% to Rs239.3 crore. In the PSAI segment, sales grew 6% to Rs490 crore.
A sector analyst with a foreign brokerage in Mumbai attributed the jump in quarterly profit mainly to sales of authorized generic medicines in the US.
The analyst, who didn’t want to be identified, said though the drug maker fared comparatively well in the domestic market, it was not a significant contributor to the quarter’s sales. But contribution from the local market should pick up in the following quarters, he said. Cost controls during the quarter also helped boost profits.
“There have been severe cost controls during this quarter. Our costs have grown only some 6% during this quarter over the same quarter in the last fiscal,” Vohra said.
The company’s operating expenses in the first quarter rose to Rs687.7 crore from Rs637.8 crore a year earlier. The costs include one-time retrenchment benefits of about €7.2 million (Rs49.3 crore) given to the sales staff at Betapharm, Reddy said.
C.H. Unnikrishnan in Mumbai contributed to this story.