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Pharma major Dr Reddy’s Laboratories Ltd’s consolidated net profit declined 60 per cent to ₹308.9 crore in the second quarter ended September 30, as compared to ₹774.7 crore in the corresponding quarter of the previous year.
Total revenue of the Hyderabad-based company too declined by 10 per cent to ₹3,616 crore (₹4,020.7 crore). Announcing the results at a press conference here on Tuesday, Saumen Chakraborty, President and Chief Financial Officer of Dr Reddy’s, said that due to the warning letter the company had earlier received from the US Food and Drug Administration, new product launches ‘were dry’.
“But in the second quarter, we did some launches, and expect more in the second half,” he added.
Profit and revenue were adversely impacted by decline in revenue from global generics in North America (12 per cent), emerging markets, including Russia, Venezuela (27 per cent) and Europe (13 per cent) among others. Indian revenues, however, grew by 14 per cent.
Selling, general and administrative expenses increased 6 per cent. The company had accrued a potential liability of ₹34.4 crore on account of Bombay High Court’s dismissal of a writ petition filed by Indian Pharmaceutical Alliance, regarding price controls by the National Pharmaceutical Pricing Authority.
Remediation According to Abhijit Mukherjee, Chief Operating Officer, all issues mentioned in the warning letter were already addressed and the company was waiting to hear from US regulator on a fresh inspection. It has so far spend about $40 million on engaging external consultants to help re mediation.
In November 2015, USFDA had issued warning letters on two facilities making active pharmaceutical ingredients (APIs) at Srikakulam (Andhra Pradesh) and Miryalaguda (Telangana), and a cancer products manufacturing facility at Duvvada Visakhapatnam (AP). The Srikakulam plant was just cleared by the Canadian regulator and an Australian regulator earlier, he said.
Road ahead Going forward, Dr Reddy’s will expand to new countries in emerging markets. “We have entered Columbia and in next two to three quarters, we will enter Brazil,” Mukherjee said.
The top priority will be quality improvement, development of complex generics and specialty products, he added.
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