Dr Reddy’s net down 13% at ₹579 crore

Hyderabad | Updated on July 29, 2020

Saumen Chakraborti, Chief Financial Officer   -  Nagara Gopal@thehindu

Launching Covid-19 drugs is immediate priority : CFO

Pharma major Dr Reddy’s Laboratories Ltd’s consolidated net profit declined 13 per cent to ₹579 crore in the quarter ended June 30, compared to ₹663 crore in the corresponding quarter of the previous financial year.

The total revenue of the Hyderabad-based company increased 15 per cent to ₹4,418 crore, against ₹3,843 crore in the same period last year.

“The net profit declined due to discontinuation of weighted reduction in R&D and completion of tax holiday for one of our plants,’’ Saumen Chakraborti, Chief Financial Officer, Dr Reddy’s, told newspersons at a press conference on Wednesday.

The revenue growth, however, was supported by ‘good’ performance in PSAI and Europe markets, he added.

Revenues from Europe registered 48 per cent growth on account of new product launches and volume traction across markets while business in emerging markets showed 9 per cent growth.

Revenues from Pharmaceutical Services and Active Ingredients (PSAI) grew 48 per cent driven by new product launches and volume traction across markets.

In the global generics segment, year-on-year growth was at 6 per cent driven by contribution from new products launches and aided by a favourable forex rate, which was partially offset by price erosion. Dr Reddy’s launched six new products during the quarter.

Covid-19 impact

When asked about the adverse impact of Covid-19, Saumen said it was ‘visible’ in revenue decline in India. “But the expenses were also lower and decrease in revenue does not necessarily mean dip in margins,’’ he said without giving specific numbers on margins in India.

Going forward, the key priorities for the company will be launching Covid-19 products and continuing product improvement and driving digital transformation.

“We are working towards launching Avigan (Favipiravir) and Remdesivir in the coming month,’’ Saumen said.

However, Covid-19 contributed to an increase in Selling, General and Administrative (SG&A) expenses, which were up 6 percent. “The increase was primarily attributed to higher freight cost due to shortage of carriers for shipping the goods from India to other countries due to Covid-19 related disruptions.”

Referring to R&D, he said the focus will be on building complex generics, bio-similars and differentiated products pipeline. | “We are also undertaking development of a few projects pertaining to Covid-19 related drugs,’’ he added.

Published on July 29, 2020

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