Dr Reddy’s Labs Q2 net down 3% on price erosion in global generics segment

Our Bureau Hyderabad | Updated on January 09, 2018 Published on October 31, 2017

Expanding formulations, biologics capacity

Pharma major Dr Reddy’s Laboratories has reported 3 per cent dip in its consolidated net profit at ₹285 crore in the second quarter ended September 30, 2017, against ₹295 crore in the year-ago period as per the International Financial Reporting Standards (IFRS).

Total revenue of the Hyderabad-based company too, decreased marginally by one per cent at ₹3,546 crore (₹3,586 crore).

The decline in profit and revenue was driven by a 11 per cent decrease in income in global generics segment from North America and also a decrease in Pharmaceutical Services and Active Ingredients (PSAI).

Addressing a press conference here on Tuesday, Saumen Chakraborti, President and Chief Financial Officer, told newspersons that year-on-year decline in revenue and profit was due to continued price erosion in the North American market for generics and channel consolidation.

Price erosion

When asked if the price erosion will impact the company’s performance in the remaining quarters of the present financial year, he said price erosion will continue as part of the business model.

“But going forward, this will be offset by new products we had already launched and those to be launched during this year,’’ he said.

Revenue in the emerging markets and India, however, grew at 14 per cent and 2 per cent, respectively. The modest growth in the domestic market was attributed to the continued impact of GST on inventories.

New facilities

Dr Reddy’s is expanding its capacity of formulations and biologics by setting up new facilities near Vizag and Bachupally in Hyderabad respectively, which will be commissioned sometime in or after the next financial year, he said.

According to Chief Operating Officer, Abhijeet Mukherjee, priority will be given on a slew of measures such as increasing manufacturing, regulatory issues and optimising cost structures.

An audit of US Food and Drug Administration (USFDA) is likely on its Duvvada facility in Andhra Pradesh in the fourth quarter, he added.

As on September 30, 2017, Dr Reddy’s had 103 generic filings, which are pending for approval cumulatively with the USFDA, including 100 Abbreviated New Drug Applications.

On Tuesday, Dr Reddy’s scrip closed flat at ₹2431.40 on the BSE.

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Published on October 31, 2017
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