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Better contributions from the emerging markets and India, favourable foreign exchange and reduced federal income tax rates in the US have helped Hyderabad headquartered Dr Reddy’s Laboratories improve December quarter sales marginally by 1% and the net profit by 45%.
The pharma company on Friday reported Rs 3,850 crore of sales and Rs 485.2 crore of post-tax profit for December quarter, as against Rs 3,806 crore of sales and Rs 334.4 crore of post-tax profit a year ago.
On Friday, Dr Reddy’s stock hit a 52-week high of Rs 2,810 before closing at Rs 2,786, a gain of 2.32% over previous close on the BSE.
Dr Reddy’s has reported a four per cent growth in global generics sales at Rs 3,134.7 crore but suffered eight per cent fall in the US generics market at Rs 1,483.2 crore, largely owing to higher price erosion in some of the key molecules.
While pharmaceutical services and active ingredients segment saw nine per cent growth at Rs 593.7 crore owing to custom pharmaceutical services business, the proprietary products suffered 52% fall at Rs 121.6 crore, which was attributed to a one-time milestone income of Rs 130 crore recorded during December quarter of previous fiscal.
While Emerging markets reported a 31% growth in sales at Rs 774.4 crore, India reported a 10% growth in sales at Rs 674.1 crore during current quarter.
The company has attributed the growth in emerging markets to new launches, traction in new markets and improved volume offtake in its existing markets.
Dr Reddy’s has attributed the 240 basis points of fall in gross profit margins at 53.9% largely to price erosion in some of its key molecules in the US market.
The company reported an improved post-tax profit margin of 12.6% during current quarter, up from 8.8% in the December quarter a year ago.
On the improved post-tax profit, the company said the effective tax rate for the quarter under review was lower at 16.4% primarily on account of reduction of the federal income tax rate from 35% to 21% in the US.
Also there was a claim of deduction of an item in the current quarter, which was previously disallowed for tax purpose, the company said.
Commenting on the results, chief executive and co-chairman GV Prasad said, “We continued to improve our performance in the third quarter of FY19, supported by significant growth in emerging markets and India, pickup in new product launches, and improvements in cost structure.
We are on track towards delivering sustainable and profitable growth.”
