Dr Reddy's net slips 4.5%

Dr Reddy's Laboratories reported a 4.5 per cent fall in quarterly net profit on Wednesday, a much smaller-than-expected drop due to strong sales of generics and a tax benefit.

Impacted by shrinking revenues from its German subsidiary Betapharm and the absence of one-time exclusivity revenues on two major products, the Hyderabad-based firm, said July-September 2007 consolidated net profit fell to Rs 267.2 crore from Rs 279.8 crore a year earlier.

The year-on-year decline in profit for the quarter was contained by a one-time tax benefit of Rs 150 crore ($ 36.5 million) from a reversal of deferred tax liability related to Betapharm.

Total revenue, at Rs 1,267 crore, dropped 37 per cent against last year's Rs 2,003.9 crore, which included Rs 781 crore from one-time gains "� exclusive marketing rights for two drugs.

Revenues from Betapharm declined to Rs 190 crore during the second quarter ended September 30, 2007 as compared with Rs 260 crore ($64 million) in the corresponding quarter last year.

There were no new announcements that might change the course of the revenue decline, but Chief Executive Officer G V Prasad expected increased revenues to set right profit margins before the end of the current fiscal, when the the manufacture of all products of the German subsidiary is entirely shifted to India.

The decline in revenues from Betapharm was due to supply constraints and the appreciation of the rupee against the euro, he explained.

Dr Reddy's shares lost 0.78 per cent (or Rs 4.95) to close at Rs 629.95 on the Bombay Stock Exchange.