Windfall sales from olanzapine (the generic version of Eli Lilly's Zyprexa 20 mg used in the treatment of schizophrenia and bipolar disorder) and rupee depreciation helped Dr Reddy's Laboratories post exceptional growth in its sales and profit during the December quarter. Revenues grew by 46 per cent to Rs 2,769 crore, while profit expanded by about 88 per cent to Rs 512 crore. Operating margins, at 31.4 per cent, were up by around 11.4 percentage points. This, however, was largely due to olanzapine sales.
Growth was driven largely by strong sales in its global generics segment, which registered a 56 per cent rise over the year to Rs 2,128 crore.
US driver
North America revenues grew by a whopping 133 per cent to Rs 1,111 crore, led by the limited competition launch of olanzapine in October last year. This product alone helped the company rake in $99 million (about Rs 485 crore) in revenues. While the company will continue to enjoy some benefits from the product in the current quarter as well, the revenue impact may not continue to be as high.
Strong volume growth in key products (tacrolimus, omeprazole Mg OTC), Shreveport products and steady ramp up in its antibiotics portfolio also helped performance.
During the quarter, the company filed three abbreviated new drug applications (ANDAs), taking the cumulative filings to 187. A total of 79 ANDAs are pending for approval with the USFDA, of which 40 are Para IVs and 10 are first-to-files (FTFs).
While improvement in market share of key products (total prescription share in fondaparinux has improved to 18 per cent now) will help the company register growth, upcoming blockbuster generic launches including Lipitor, Plavix, Seroquel, Actos and Geodon too could provide it growth opportunities.
The current growth rates, however, will be difficult to sustain as competition will increase in a couple of quarters.
Domestic revival
India sales registered a growth of 11 per cent during the quarter, driven by volume increase and new product launches over the year. It had launched six new products during the quarter. Sales force realignment and promotional activities should help the company match up to the industry growth levels in a couple of quarters.
The company continued to face challenges in Germany, what with Betapharm reporting flat sales driven by pricing pressure. Its Russia revenues too were flat during the quarter. While delay in the onset of winter affected sales, rupee depreciation helped offset the effect to some extent. That said, the company's secondary sales growth, at 23 per cent, continued to outperform the industry. The slower growth, however, may reverse, as the company has seen a robust pick-up in customer orders this quarter.
The pharmaceutical services and active ingredients saw sales increase by 12 per cent to Rs 560 crore.