Companies

Dr Reddy’s net slumps 80% on lower US sales, price erosion

G Naga Sridhar Hyderabad | Updated on January 17, 2018 Published on July 26, 2016

Bitter pill Saumen Chakraborty (right) President, Chief FinancialOfficer and Global Head of IT and BPE, Dr Reddy's Laboratories, andAbhijit Mukherjee, Chief Operating Officer, announcing the resultsin Hyderabad on Tuesday MOHAMMED YOUSUF

reddy

The company hopes to return to normalcy in the next quarter

Pharma major Dr Reddy’s Laboratories Ltd’s consolidated net profit decreased 80 per cent in the first quarter ended June 30 to ₹126 crore compared with ₹626 crore in the corresponding quarter of the previous financial year.

The total revenue of the Hyderabad-based company fell 14 per cent to ₹3,234.5 crore as against ₹3,757.8 crore in the year-ago period.

“Decline in profit was primarily due to lower sales with research and development and selling, general and administrative costs as per plan besides remediation costs (in the wake of a warning letter from USFDA on three of its plants),’’ Saumen Chakraborty, Chief Financial Officer, Dr Reddy’s, told newspersons at a press conference here on Tuesday.

Price erosion, lack of new launches in North America and zero sales in Venezuela, which had given ₹177-crore revenue in the corresponding quarter of the previous year, adversely impacted the company.

While revenues from global generics segment in North America, emerging markets, rest of the world and Europe declined, revenue from India grew 10 per cent. Sales in Russia grew moderately at 2 per cent on the account of the depreciation of the rouble.

USFDA warning

When asked about the status of the USFDA’s warning letter, Abhijeet Mukherjee, Chief Operating Officer, said: “We have put in huge amount of remediation and made all commitments more or less…We are in the process of sending a re-inspection request to the US regulator,’’ he said.

The company expects that the remediation costs and rouble deprecation might not have adverse impact on the second quarter. It has also lined up few ‘key’ launches for the quarter.

“We should be able to return to normalcy in the second quarter,’’ the Chief Financial Officer said. The drug maker now has 78 pending product approvals, including 50 Para IV filings and 18 First to Files.

Dr Reddy’s scrip fell 4.37 per cent on the BSE on Tuesday and ended at ₹3322.85.

Published on July 26, 2016
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