Drug maker Dr Reddy's Laboratories on Friday said its net profit rose 175 percent in the quarter ended March compared to previous year, despite fall in North America generics business.
North America constitutes about 50 percent of Dr Reddy's generic business.
Emerging markets led by revival of Russian generics business and drop in expenses helped the company to post decent profit, in an otherwise a tough quarter.
The net profit rose to Rs 337.6 crore from Rs 122.6 crore from a year ago. Revenues dropped 5 percent to Rs 3,554.2 crore from Rs 3,756..2 crore in the previous year.
The net profit of Dr Reddy's declined year-on-year basis if not for the write-down of Rs 431 crore the company took during the same period previous year on account of its non-repatriation of Venezuela receivables.
On sequential basis too the net profit declined 33.5 percent, and revenues dropped 3.5 percent.
On year-on-year basis the company was able to reign in its expenses by 9 percent to Rs 330 crore.
Earnings were below analysts' expectations.
A CNBC-TV18 poll of analysts estimated the net profit to be Rs 415.8 crore and revenues at 3680 crore.
For the full year ended March, Dr Reddy's revenues declined 9 percent to Rs 14008 crore, while net profit rose to Rs 1200 crore.
Global generics revenue, which contributed 82 percent to total income, slipped 5 percent to Rs 2914 crore YoY, impacted by North America.
North America business was lower by 19 percent at Rs 1,534.9 crore on account of increased competition in valgancyclovir, and injectables franchise coupled with discontinuation of the McNeil business, Dr Reddy's said in its filing.
During the quarter, the company has filed 13 abbbreviated new drug applications (ANDA).
As of March 2017, cumulatively 101 generic filings are pending for approval with the USFDA, of which 21 have 'First-to-File' status, it said.
Emerging markets business rose 25 percent to Rs 601.2 crore in Q4 primarily on account of bounce back in Russia business. Russia business constitutes more than half of Dr Reddy's emerging market sales. Russia business registered year-on-year growth rate of 9 percent. On a constant currency basis the growth rate was 26 percent.
Dr Reddy's struggled in Russia due to weakness in the Rouble and slowdown of Russian economy on account of slum in oil prices.
"Gradual sequential improvement through the year is backed by improving macro-econoic environment across geographies coupled with focussed foray into the institutional business in some countries," the company said.
Revenues from India grew 8 percent to Rs 571.1 crore, and Europe rose 17 percent.
PSAI revenue (pharmaceuticals services and active ingredients) during the quarter dipped 2 percent to Rs 540 crore.
"FY17 has been a challenging year due to lack of new product approvals for the US market," said GV Prasad, Chief Executive Officer and Co-chairman of Dr Reddy's.
"However, our other geographies delivered good performances, with several new product launches. We are also seeing expanded global access to our biosimilars, as result of successful registrations in emerging markets," Prasad said.
"We will continue our focus on rationalisation of cost structures and building a sustainable quality culture across the organisation," Prasad added.
Dr Reddy's said research and development expenses stood at Rs 460 crore in Q4, which was 11.5 percent as a percentage of revenue.
The company spend on R&D is focussed on complex generics, biosimilars and differentiated products pipeline.
Shares of Dr Reddy's dropped 0.25 percent and was trading at Rs.2585.80 on BSE at 2.50 pm, the benchmark Sensex declined 0.34 percent to 30,149.54 points.
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