Slowdown in Russia and CIS region did not impact Dr Reddy’s drug sales in this geography. The company managed healthy double digit growth (27 per cent) in constant currency terms, largely driven by robust volume growth. However, the sharp depreciation in the rouble led to a 10 per cent decline in the region’s revenue in rupee terms.

The company also put up a good show in the US. Thanks to the sustained revenue from low-competition drugs such as decitabine and azacitidine, launch of six drugs and market share gains in other key products such as ziprasidone, Dr Reddy’s revenue in the geography grew 4 per cent on a high base. Back home, Dr Reddy’s held on to its double-digit growth pace; domestic revenue grew 10.6 per cent year-on-year in the December quarter.

Gross margin was expected to take a sharp hit in the December quarter due to the sharp depreciation of rouble against rupee. However, forex hedges helped the company deliver gross profit margin of 58.2 per cent, just 2.4 percentage points lower than in the year-ago period. But the benefit of the hedges may be limited in the future, if the rout of the rouble continues.

Over the last few quarters, Dr Reddy’s has stepped up investment in research and development. The research spend as a percentage of revenue rose by 2.8 percentage points to 11.2 per cent in the December 2014 quarter.

Currently, 68 products of the company await approval from the US drug regulator. Of these, Dr Reddy’s is possibly the first generic filer in 13 drugs on which the company may be entitled to exclusive selling rights for 180 days.

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