 "Dr Reddy's July-Sept net falls 17% and it may not see better times in near future")
Dr Reddy’s Laboratories Ltd, India’s second-largest drug maker by revenue, reported a 17 percent drop in its second-quarter profit due to higher costs, pushing its shares down nearly 3 percent on Wednesday.
The company also said it bought the rights to sell the nicotine patch Habitrol in the United States from Novartis Consumer Health Inc, a unit of Swiss firm Novartis.
The agreement was entered into on 18 October and is subject to a review by the US Federal Trade Commission, Dr Reddy’s said in a statement to the exchanges, without disclosing further details.
The company reported a net profit of Rs 574 crore for the quarter ended September, down from Rs 690 crore a year earlier.
According to brokerage Emkay, Dr Reddy’s sales growth in the US and Rusia were muted during the quarter. “US delivered a growth of 9.8% in constant currency due to lower sales in gDacogen, lack of new approvals during the quarter and price erosion in base business because of channel consolidation… Russia de-grew by 13% yoy,” it said in a post-earnings note.
Domestic formulations grew 14 percent during the quarter led by robust volume and prescription growth.
The company expects the second half to be better on account increased approvals as it has filed 11 ANDAs in the first half. But it is doubtful whether the company will be able to keep up the momentum beyond the second half of this year.
In keeping with the company’s projections, Emkay too feels the second half will be better for the drug major. “We believe with recent approval likes gXopenex and gRapamune, 2H15 would be better than 1H15 for DRL especially in the US market. Domestic business should continue the healthy growth trajectory,” it said.
However, pace of new approvals in the US market is something to be closely looked at.
“We believe the company is going through a phase of low approvals and is hence going to see tepid growth in FY15E and FY16E,” the brokerage said.
With inputs from Reuters