Dr Reddy's Laboratories (DRL), the second largest Indian pharma company, has suffered heavy setback during the third quarter ended December 2007.The financial performance based on US GAAP of DRL has shown a net loss of Rs 84.66 crore for the third quarter ended December 2007 as against a net profit of Rs 187.94 crore in the similar period of last year. Its net sales as per US GAAP, declined by 20.2 per cent to Rs 1232 crore from Rs 1543 crore. The net loss is mainly due to impact of several price reforms, increasing rebates to insurance companies and change in the composition of its top products. DRL has taken an additional amortization of certain product related intangibles of betapharm of Rs 236 crore.
Commenting on the results, GV Prasad, vice-chairman and CEO, said," In the first nine months of current fiscal, on alike-to-like comparison, we have grown revenues by 9 per cent to $932 million and generated an EBITD of $218 million. We remain confident of the outlook for the next financial year. We expect sustained profit and sales growth in APIs and the branded generics business in India and Russia. We expect to benefit from the upside potential from the launch of sumatriptan (GSK's Imitrex) in the US in third quarter of 2008-09. Germany is an important market for Dr Reddy's and we remain committed to building a profitable business over the next few years."
"Our immediate priority is to de-risk the supply situation and we are making good progress with the transfer of products out of our major supplier to our facility in India and to other manufacturers within Europe. Despite the competitive pressures in this market, we well target to improve the market shares on the back of assured supplies, new launches and cost savings from the transfer of key products out of India." Prasad added.
The company's standalone net profit declined sharply by 91.6 per cent to Rs 42.29 crore from Rs 503.49 crore in the corresponding period of last year. Its standalone nets sales also moved down sharply by 33.8 per cent to Rs 763.70 crore from Rs 1153.39 crore. The sharp fall in profit pushed down its earning per share to Rs 2.52 from Rs 31.55 in the last period.
The company's consolidated net profit declined by 40.8 per cent to Rs 62.55 crore from Rs 105.63 crore in the similar quarter ended in December 2006. DRL's net sales also came down heavily by 16.8 per cent to Rs Rs 1265.98 crore from Rs 1521.48 crore.
The company's scrip touched to its 52-weeks lowest level at Rs 530 on January 24, 2008. As at the close of the day, DRL scrip was at Rs 605.40. According to analyst, the poor financial performance will put further pressure on scrip movement in near future and added that rupee appreciation as well as costly acquisition in Germany impacted the bottom line adversely.