Dr Reddy’s Laboratories Ltd reported decent results for the September quarter, with its US business continuing to drive growth for the company.
Net sales grew by 21% to Rs 2,268 crore, with revenue from North America growing by as much as 43% in dollar terms. Growth in this market has been aided by a number of new launches in the past few months, including Allegra D24 OTC, Arixtra, Effexor XR and Gemzar.
Five new products were introduced just last quarter and Dr Reddy’s filed for another four abbreviated new drug applications (ANDA), taking the total number of pending ANDA filings to 76. Of these, 40 are Para IV filings and 11 are first-to-files.
Growth can be expected to be robust in the US market on the back of new launches, and the company could well surprise positively, given the strong line-up of ANDA filings. Thanks to the strong performance in the US market as well as the Russian market, Dr Reddy’s reported a healthy 20% growth in adjusted earnings before interest, tax, depreciation and amortization (Ebitda).
The Indian business was expectedly sluggish, posting 10% growth in sales on a year-on-year basis. The domestic business had grown at a high rate of 25% in the year-ago quarter, representing a high base. Revenue from Europe declined because of a sharp fall in the firm’s sales in Germany, which continue to be plagued by the tendering process.
The company’s performance is expected to pick up in the second half of the year on the back of new launches with exclusive sales, as well as an increase in the sales of earlier launches such as fondaparinux—a blood-thinning drug.
Given the strong outlook, it’s not surprising that Dr Reddy’s shares have outperformed the market by a decent margin in the past one year.