Dr Reddy's Q4 net profit rises three-fold to Rs 312 cr

However revenues continued to be impacted by fall in US business

Indian pharmaceutical major Dr Reddy's Laboratories Limited has reported a three-fold increase in consolidated net profit at Rs 312.5 crore for the quarter that ended on March 2017 as compared to Rs 74 crore in the corresponding quarter previous year.

The rise in net profit comes on the back of a substantial decline in operating expenses as well as the lower foreign exchange loss primarily related to its business in Venezuela, besides the lowering of tax expenses. Company's revenues, however, fell by 5 per cent due to lower sales contribution from its North American business.

The consolidated revenues for the quarter under review stood at Rs 3,554.2 crore as compared to Rs 3756.2 crore in the previous quarter. Business in the US declined by 19.35 per cent, impacting revenues even though the company was able to register a growth in the global generics business across Europe, India and other  emerging markets.

The board has recommended payment of a dividend of Rs 20 per equity share of face value Rs 5 each for the year ending on March 2017.

Of the total revenues in the fourth quarter, global generics and pharmaceutical services and active ingredients (PSAI) accounted for Rs 2913.8 crore and Rs 540.1 crore respectively.

In the global generics business, the revenues from the US fell by 19 per cent to Rs 1,534.9 crore from Rs 1,895 crore in the year-ago period. However, the same has witnessed a 25 per cent growth in emerging markets at Rs 601.2 crore, while in Europe there has been a growth of 17 per cent at Rs 206.6 crore. In India, there has been an 8 per cent increase at Rs 571 crore during the quarter under review.

Meanwhile, the the consolidated net profit for the full year ended March, 2017 declined 40 percent to Rs 1,203.9 crore from Rs 2,001.3 crore in the previous year. The overall revenues were down 9 percent at Rs 14,080.9 crore as compared to Rs 15,470.8 crore in the previous year.

"FY 17 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," said G V Prasad, co-chairman and CEO at Dr Reddy's.

In the fourth quarter the operating expenses, including the R&D spend, has decreased by 38 per cent at Rs 313.5 crore and finance expenses fell by 98 per cent at Rs 4.8 crore, helping the company post a rise in net profit despite a fall in revenues. Net finance expenses stood at Rs 264.6 crore in the year-ago period.

According to the coompnay's management, US revenues from global generics declined 16 per cent at Rs 6,306 crore for the full year ending on March 2017. Decline was primarily due to increased competition in key products, including valganciclovir, decitabine and azacitidine, among others. Discontinuation of the McNeil business was another factor that impacted the compnay, besides a 11 per cent decline in revenues, which stood at Rs 2,100 crore, in emerging markets.

However revenues in India and Russia grew 9 per cent and 11 per cent at Rs 2,3001 crore and Rs 1,100 crore respectively in FY 17 as compared to the previous year.

According to the compnay, gross profit margin for the year that ended in March was down 400 basis points at 55.6 per cent.The decline was primarily attributed to high price erosion in North American generics business, impairment charge taken at its Bristol plant, provision towards new product inventory and higher manufacturing overheads.