MUMBAI (Reuters) - Dr Reddy's Laboratories's(REDY.NS) (RDY.N) reported slightly lower-than-expected quarterly net profit as price cuts in existing drugs negated strong sales from new product launches in its key North America market.
April-June consolidated net profit jumped 27.8 percent to 3.36 billion rupees from 2.63 billion rupees a year earlier, India's No. 2 drugmaker by sales said. Sales rose 28.5 percent to 25.41 billion rupees.
Analysts estimated the net profit at 3.57 billion rupees on net sales of 25.74 b illion rupees, according to Thomson Reuters I/B/E/S.
"The headline numbers are weaker than my expectations," said Bino Pathiparampil, analyst at brokerage IIFL. The situation should improve in the July-September quarter, he said.
Global demand for cheaper generic medicine from companies like Dr Reddy's and local rivals Ranbaxy Laboratories (RANB.NS), Cipla (CIPL.NS) and Sun Pharmaceutical Industries (SUN.NS) is booming as developed nations battle rising healthcare costs.
Sales in North America, a major market for Indian generic drugs, grew 27 percent to 7.9 billion rupees, Dr Reddy's said in a statement, helped by the five new generics launched including Sanofi's (SASY.PA) blood clot preventer Plavix, which went off patent in May.
The launch of Plavix was not expected to help the drugmaker in a big way since the product segment is crowded, IIFL's Pathiparampil said.
The growth was also offset by regular year-on-year price declines in existing product basket, the company said.
The drugmaker filed 18 new product registrations globally in April-June and signed a pact with Germany's Merck KGaA (MRCG.DE) to make cheap versions of biotech cancer drugs.
Under the agreement, Merck will handle commercialisation in most parts of the world and will pay Dr. Reddy's royalties. In the United States the two companies will co-commercialise the products on a profit-sharing basis.
Sales in India grew 19 percent to 3.5 billion rupees while that in Europe rose 14 percent to 2.2 billion rupees, it said.
Shares in Dr Reddy's, valued $5.16 billion, fell 1.1 percent on Thursday to 1,654.55 rupees. The stock is down 6.6 percent in April-June as compared to the benchmark healthcare index that gained 3.9 percent.
(Reporting by Kaustubh Kulkarni; Editing by Anand Basu)
Updated Date: Jul 19, 2012 19:29 PM