Dr. Reddy’s Q1 net rises 42%

Dr. Reddy’s Laboratories posted a consolidated net profit of ₹676.5 crore for the quarter ended June 30.

An increase of more than 42% compared to the ₹476.1 crore a year earlier, it was boosted by a one-time receipt resulting from the settlement agreement pertaining to its generic version of a cancer drug with Celgene in Canada.

Other income helps

The ₹345.7 crore receipt that pushed up ‘other income’ helped the company shrug off a decline in revenue and gross profit in the Pharmaceutical Services and Active Ingredients (PSAI) and Proprietary Products segments.

Total revenue from operations of the Hyderabad-headquartered firm increased 3.2% to ₹3858.2 (₹3,736.5 crore), according to the results prepared under the Indian Accounting Standards (Ind AS). Total income was 13.24% higher at ₹4,288.3 crore(₹3,786.9 crore).

CEO and co-chairman G.V.Prasad said: “We grew in most of our key markets and hope to continue this momentum with a sharper focus on performance. We will continue our journey of operational excellence, cost leadership and innovation across our businesses.”

Saumen Chakraborty, CFO, said price erosion due to increased competition in “some of our key molecules in the U.S and Europe and lower sales from PSAI business” impacted the gross profit margin. While revenue from Global Generics, the mainstay, increased 7.66% to ₹3,301 crore (₹3,066 crore), the gross profit from the segment was flat at ₹1,900.7 crore (₹1,875.6 crore). PSAI revenue declined to ₹605.2 crore (₹702.0 crore), while gross profit fell to ₹33.2 crore (₹119.2 crore). Proprietary Products revenue and net profit dropped to ₹28.1 crore (₹73 crore) and ₹20.7 crore (₹59.4 crore).

With regard to geographies, the growth in global generics revenue in North America, the biggest market for the company, grew year on year by 3%. The sequential growth was better, the company said, citing contribution from new products – five new products were launched and one product re-launched – and increase in volumes. Price erosion and adverse foreign exchange movement partly offset the gain.

Year-on-year revenue from emerging markets increased by 10%, with Russia driving the growth, while revenues from India and Europe were 15% and 19% higher.

The notes accompanying the results said ‘Other Income’ includes an amount of ₹345.7 crore received from Celgene pursuant to a settlement agreement entered in April. The agreement effectively settles any claim the company or it affliates may have had for the damages under Section 8 of the Canadian Patented Medicines with regard to the company ANDS for a generic version of Revlimid brand capsules (Lenalidomide) pending before Health Canada.

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