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Dr Reddy’s has continued to put up an improved set of numbers in the second quarter of 2018-19 as well, primarily driven by new launches in India and healthy performance in emerging markets.
Year-on-year, the company’s consolidated net profit for the quarter grew 77 per cent to ₹504 crore against ₹285 crore seen in the same period last year. The consolidated total revenue of the company rose 7 per cent to ₹3,798 crore against ₹3,546 crore in the year-ago period.
Tepid show in US
Dr Reddy’s US business, that contributes 38 per cent of the overall revenue, registered flat growth year-on-year due to absence of revenue from Suboxone and continued pricing pressure on some of the key molecules.
Launched in June 2018 in the US, Suboxone generic drug brought in around $15 million sales in the first quarter of FY19. The company has stopped selling the drug as it is now under litigation. Any delay in litigation in the Suboxone case will lower the revenue from the drug as more competitors are likely to enter into the market.
Dr Reddy’s US business is still under pressure as lucrative product launches such as Suboxone, Nuvaring and Copaxone are delayed and the key Duvvada plant is yet to get regulatory clearance.
However, the company has guided for 10-15 more generic drugs approvals in the US in FY19. As of September 30, 2018, cumulatively 113 generic filings are pending for approval with the USFDA, of these 63 are Para IV (likely to get 180 days exclusivity) opportunities.
Traction in domestic biz
The company’s domestic business, which contributes around 18 per cent of the overall revenue, grew 8 per cent y-o-y in the second quarter due to new product launches and improvement in base business. The company expects double-digit growth in domestic business in FY19. Revenue from Emerging Markets grew by 36 per cent y-o-y, driven by improved volume in existing markets and scaling up of operations in new markets.
Dr Reddy’s is on track to reduce cost on a sustained basis. Its selective investments in areas including biosimilars and injectibles will drive the revenue growth in the next 2-3 years.
The operating profit margin expanded to 22.8 per cent during the quarter from 19.4 per cent seen in the same quarter last year.
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