Dr Reddy's posts good growth despite challenges

Hyderabad-headquartered and NYSE-listed pharma firm Dr Reddy's announced growth in numbers for the quarter ended September 30 despite not having any significant new product launches in the US during the quarter and after suffering reversals in the emerging markets with currency volatility. To top it all, it has even had to deal with a regulatory overhang.

Its second quarter financial results announced on Thursday, October 29th, showed revenues were up 11 per cent on a year-on-year basis increasing to Rs 3,989 crore from Rs 3,587.8 crore in the same period last year.

The profit for the second quarter period crossed Rs 700 crore. According to analysts, these were a good set of numbers given the challenges and the fact that it did not take any price hikes. Revenues from US showed a 32 per cent year-on-year growth and revenues in India posted a year-on-year growth of 14 per cent. The hit was felt in the emerging markets where in this period the revenues declined by 22 per cent.

In a note put out by the company announcing the results, Dr Reddy's Co-chairman and CEO G.V. Prasad says: "While we are satisfied with our performance, we are intensely focused on enhancing our quality management system and infrastructure to meet evolving global requirements and address the pending cGMP related matters at some of our facilities."

Some of Dr Reddy's critical product approvals in the US have been held up because of the USFDA (US Food and Drug Authority) observations on the company's API (bulk drug) plant in Srikakulam in Andhra Pradesh, which came to light in November last year.

The company has subsequently responded to the regulator and is now taking up site transfer to meet customer needs as a way out for the moment. Also, giving an update on its API (active pharmaceutical ingredients) facilities, the company revealed that in October 2015, two of its API customers received ANDA approval rescission letter from the USFDA.