Dr Reddy’s Q4 net profits grow multifold driven by good India and US performance

Dr Reddy’s Laboratories Ltd reported net profits for the March quarter at 959.2 Crore grew more nine folds from 99.6 Crore in the year-old quarter on a favorable base. In the year ago, the net profits had seen the impact of certain one -off (impairment charges to the tune of 751.5 crore). Even adjusted for the same also the net profit would have grown more than 12% year-on-year.  

The company’s performance is likely to have been driven by strong growth seen in the key US markets. North America generic sales contributing 40% to overall grew 27 % year-on-year. This primarily was on account of new product launches and favorable forex rate improvement partly offset by price erosion, the company.  

The company had launched the generics of Revlimid (multiple myeloma treatment drug) during September quarter with exclusivity of 180 days for two strengths. The same is likely to have contributed most though other niche products’ contributions and new launches are also likely to have supported well. 

The niche products see lower competition and hence aid margin improvements and profitability.  

The company’s reported Ebitda at 1631.2 crore also improved significantly over 1298.0 Crore in Q4FY22.Ebitda stands for Earnings before interest tax depreciation and amortisation.  

The company’s performance in other markets as India, Europe also supported overall show, even though Emerging markets sales did see some decline. 

India generics sales contributed a fifth to overall sales revenues of the company, at 1283.4 Crore and grew phenomenal 32% year-on-year. The same as per company was driven by favorable price variance, new product launches and non-core brand divestments. Europe sales at Rs 496 Crore though also grew 12% year-on-year helped by new product launches, traction in base business volumes, Emerging market sales however declined 7% year-on-year to 1114.2 Crore led by declining Russia revenues while Romania and CIS business revenues remained flat. 

Overall revenues at 6296.8 crore during the quarter, however, grew 16% year-on-year. On a sequential basis, however, these were down 7% with a sequential decline being observed in the US sales.

The Revlimid generics that helped drive year-on-year growth for US sales during the quarter, however, were expected to see some decline sequentially as per analysts, due to competition entering, post the end of 180-day exclusivity. The North American sales declined 17% sequentially. The company attributed the decline to fluctuation in demand for new launches. 

The India sales with sequential growth of 14% and Europe with sequential growth of 15% provided support, though Emerging market sales remained weak declining 15% sequentially. 

 The net profits were down 23% sequentially from 1247 crore reported in the previous quarter. The Ebitda on sequential basis declined by about 18% from 1965.8 crore in the previous quarter.  

The company launched 6 new products during the fourth quarter and Fy23 saw 25 new product launches in the US markets. 

During FY23, the company filed 12 abbreviated new drug applications (ANDA). As on 31st March 2023, the company has 86 products pending approval for new launches. This indicates towards a strong pipeline of products the company has for launches in the US markets. 

The company during FY23 saw its net profits at 4506.7 crore grow 91% year-on-year. The Ebitda improved to 7308.1 Crore from 5140 crore. During the year revenues at 24587.9 crore were up 15% Year-on-year.

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