Generics, forex gains fire Dr Reddy’s second quarter earnings in 2009

Indian generic firm Dr. Reddy’s Laboratories’ earnings for the quarter ending on September 30 2009 more than doubled, exceeding expectations, triggered by generics and foreign exchange gains.

Dr Reddy’s consolidated net profit for the July-September quarter rose to 2.17 billion rupees ($46.6 million) from 1.05 billion rupees last year. Consolidated revenue increased 14% to 18.37 billion rupees from 16.15 billion rupees a year ago.

The growth in revenues is largely driven by global generics, Dr Reddy’s said in a statement announcing quarterly results.

Dr Reddy’s revenue from its global generics business rose 14% from a year earlier to 12.7 billion rupees, led by the key markets of North America, Russia and India.

Revenue from the North America market surged 39% to 4.3 billion rupees, driven by high volume growth across existing products and product launches in the past 12 months.

Dr Reddy’s has filed 141 filings for generic formulations –abbreviated new drug applications (ANDA) with US FDA. 62 ANDAs are pending approval at USFDA of which 27 are Para IVs and 16 are first to files (FTFs).

Revenues from Europe fell 13% at Rs. 2.8 billion ($59 million) in Q2 FY10 as against Rs. 3.3 billion ($68 million) in Q2 FY09.

Revenues from Germany decreased by 21% to Rs. 2.2 billion ($46 million) in Q2 FY10 from Rs. 2.8 billion ($58 million) in Q2 FY09, on account of the lower sales due to the AOK tender and the pricing pressure in the market.

Dr Reddy’s revenues from rest of Europe grew by 29% to Rs. 654 million ($14 million) in Q2 FY10. The growth is largely contributed by UK with sales of Rs. 436 million ($9 million) representing a growth of 20%.

Revenues from Russia & Other CIS markets surged to Rs. 2.3 billion ($49 million) in Q2 FY10 as against Rs. 1.9 billion ($39 million) in Q2 FY09.

Dr Reddy’s revenues represented a growth of 13% at Rs. 2.5 billion ($52 million) in Q2 FY10 from Rs. 2.2 billion ($47 million), led by key brands of Omez, Omez-DSR and Razo.

Dr Reddy’s launched 17 new products in India during the quarter.

Dr Reddy’s revenues from Pharmaceutical Services & Active Ingredients (PSAI) grew 11% at Rs. 5.4 billion ($112 million) in Q2 FY10 as against Rs. 4.8 billion ($100 million) in Q2 FY09, driven by the regions of Europe and the benefit of rupee depreciation against the dollar.

Dr Reddy’s filed 5 DMFs globally during the quarter, with 2 in US, 2 in Europe and 1 in RoW. The cumulative DMF filings as of Sep 09 stood at 361.

Dr Reddy’s R&D expenses stood at Rs. 963 million in Q2 FY10 representing 5% of revenues.

Dr Reddy’s said the results for the quarter included a net finance income of 208 million rupees, compared with net finance costs of 482 million rupees a year earlier. This was mainly because the company recorded a net foreign exchange gain of 244 million rupees in the second quarter, compared with a loss of 296 million rupees a year earlier.

Headquartered in Hyderabad, southern India, Dr. Reddy’s Laboratories produces finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. Dr Reddy’s conducts research in the areas of cancer, diabetes, cardiovascular, inflammation and bacterial infection.