Dr Reddy's Laboratories (DRL), a second largest pharma major with net sales of Rs.13,866 crore, has posted net profit growth of 175 per cent during the fourth quarter ended March 2017 despite lower growth in sales. Its net profit increased to Rs.338 crore from Rs.117 crore in the corresponding quarter of last year. The net profit moved up sharply mainly due to lower tax provision of Rs.9.7 crore as against Rs.156.3 crore in the last period basically due to resolution of certain tax matters pertaining to prior years. EBDIT improved only by 7.8 per cent to Rs.611 crore from Rs.567 crore and profit before tax moved up by 23.5 per cent to Rs.337 crore from Rs.273 crore. With strong growth in profits, EPS improved to Rs.20.38 from Rs.7.19 in the last period.
The board of directors has recommended handsome equity dividend of 400 per cent for the year 2016-17. After announcement of financial results, DRL scrip declined by Rs.5.40 to Rs.2,587 on BSE in the afternoon session and closed at Rs.2,584.70.
The company's consolidated net sales declined by 5.3 per cent to Rs.3,499 crore from Rs.3,695 crore in the similar quarter of last year. The global generics sales declined by 5 per cent to Rs.2,914 crore from Rs.3,077 crore and pharmaceutical services and active ingredients (PSAI) sales declined by 6 per cent to Rs.540 crore from Rs.577 crore. The sales of proprietary products remained flat at Rs.100 crore.
The sales of generic in North America declined by 19 per cent to Rs.1,535 crore from Rs.1,895 crore and that in Europe improved by 19 per cent to Rs.207 crore from Rs.176 crore. Its domestic sales of generics went up by 8 per cent to Rs.571 crore from Rs.526 crore. However, generic sales in emerging market increased by 25 per cent to Rs.601 crore from Rs.480 crore. The sales of PSAI in North America declined sharply by 28 per cent to Rs.53 crore from Rs.74 crore and that in Europe declined by 2 per cent to Rs.254 crore from Rs.259 crore. The domestic sales of PSAI declined sharply by 35 per cent to Rs.40 crore from Rs.60 crore. The PSAI sales in ROW increased to Rs.194 crore from Rs.184 crore.
Its other operating income increased by 13.5 per cent to Rs.113 crore from Rs.99 crore. However, its other income declined by 76 per cent to Rs.21 crore from Rs.85 crore. Its R&D expenditure reached at Rs.46 crore and worked out to 12.9 per cent of revenues.
G V Prasad said, “FY17 has been a challenging year due to lack of new product approvals for the US market. However, our other geographies delivered good performances, with several new product launches. We are also seeing expanded global access to our biosimilars, as a result of successful registrations in emerging markets. We will continue our focus on rationalisation of cost structures and building a sustainable quality culture across the organisation.”
For the full year ended March 2017, DRL's consolidated net sales declined by 9.1 per cent to Rs.13,866 crore from Rs.15,248 crore in the previous year. Its EBDITA declined by 40.4 per cent to Rs.2,644 crore from Rs.3,880 crore and its net profit declined sharply by 39.4 per cent to Rs.1,292 crore from Rs.2,131 crore. Due to lower net profit its EPS moved down to Rs.77.53 from Rs.124.93 in the last year. Foreign exchange loss was at Rs.7.4 crore as compared to Rs.413 crore in the previous year primarily related to the Venezuela adjustment.
The sales of global generics declined by 10 per cent to Rs.11,541 crore from Rs.12,806 crore in the previous year and that of PSAI declined by 5 per cent to Rs.2,128 crore from rs 2,238 crore. The sales of proprietary products and others declined by 3 per cent to RS 412 crore from Rs.427 crore.
The sales of Generics in North America declined by 16 per cent to Rs.6,360 crore from Rs.7,545 crore due to stiff competition for valganciclovir, decitabine, azacitidine, etc. coupled with discontinuation of the McNeil business. Its European sales declined slightly by 2 per cent to Rs.761 crore from Rs.773 crore. Similarly, its generic sales in emerging market declined by 11 per cent to Rs.2,107 crore from Rs.2,359 crore in the previous year. However, its domestic sales of generics improved by 9 per cent to Rs.2,313 crore from Rs.2,129 crore. The sales of PSAI in North America improved by 17 per cent to RS 3,569 crore from Rs.3,052 core. However, PSAI sales in Europe and India declined by 10 per cent and 33 per cent to Rs.841 crore and Rs.175 crore respectively. The sales of PSAI in ROW improved slightly by 2 per cent to Rs.755 crore from Rs.740 crore.
The company filed 26 ANDAs with US FDA during 2016-17 and cumulatively 101 generic filings are pending for approval. Its R&D expenditure touched to Rs.1,960 crore and worked out to 13.9 per cent of revenues against 11.5 per cent in 2015-16. focus continues to build sustainable revenue stream through a mix of simple and complex generics, biosimilars and differentiated products pipeline.