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Our Bureau

Hyderabad, Oct. 24

The performance of Dr Reddy’s Laboratories took a beating in the second quarter of the current fiscal due to a sharp decline in revenues from its German subsidiary betapharm. Its consolidated net profitdropped 5 per cent at Rs 267 crore as against Rs 280 crore in the second quarter of last financial year.

The Hyderabad-based pharma major also suffered a 37 per cent dip in consolidated sales at Rs 1,267 crore ( Rs 2,003 crore) for the quarter under review as the revenues from the Rest of the World (ROW) markets declined 9 per cent to Rs 1,300 crore (Rs 1,400 crore).

The German sales decreased 12 per cent to Rs 188 crore due to ongoing supply constraints and rupee appreciation, Mr G.V. Prasad, Vice-Chairman and Chief Executive Officer, told newspersons here on Wednesday.

During the quarter, the company’s tax line had a reversal of deferred tax liability in Germany to the tune of Rs 145 crore.

However, Dr Reddy’s improved its performance on home turf with domestic sales up 9 per cent at Rs 205 crore, led by strong sales in key brands such as Omez, Stamlo beta, Atocor and Razo. The revenues from Russia increased to Rs 98 crore (Rs 78.3 crore).

Sales in Active Pharmaceutical Ingredients (APIs) and branded finished dosages increased 11.5 per cent and 27 per cent respectively, while generic finished dosages and custom pharmaceuticals declined significantly due to decrease of sales in Europe and Mexico.

To make betapharm profitable, the firm is shifting manufacturing of major products (about 20) to India from Germany.

“Two product lines have already been moved to India and remaining major products will be shifted to India by March 2008,” Mr Prasad said.

“The full potential of betapharm would be met by FY09, though its performance is expected to improve from next quarter itself,” he added.

The firm would be investing $50 million in two Special Economic Zones (SEZs) being set up in Hyderabad and Visakhapatnam.

“We are also augmenting our R&D pipeline. Currently, there are 10 oncology products, eight biogenerics and six New Chemical Entities (NCEs) under development,” Mr K. Satish Reddy, Managing Director and Chief Operating Officer, said.

New markets in Australia, Turkey, New Zealand, Japan and Mexico would be explored, he added.

The Dr Reddy’s scrip, which opened at Rs 635, closed at 634.90 on the BSE.

More Stories on : Financial Performance | Pharmaceuticals | Dr. Reddy's Laboratories Ltd

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