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Feb 14, 2013, 01.03 PM IST | Source: Moneycontrol.com

Dr Reddy's Q3 revenue seen up 5% at Rs 2,913cr

Strong growth in US generic drug sales will continue to drive revenue growth for Dr Reddy's Laboratories. The pharma major will report its third quarter earnings on Thursday.

Moneycontrol Bureau

Strong growth in US generic drug sales is expected to continue driving revenue growth for Dr Reddy's Laboratories . The pharma major will report its third quarter earnings on Thursday.

According to a CNBC-TV18 poll, Dr Reddy's third quarter consolidated net profit is seen at Rs 428 crore, down from Rs 513 crore a year ago, while revenue is seen up 5 percent at Rs 2,913 crore.

Analysts forecast range between Rs 372-492 crore profit after tax and revenue estimates are between Rs 2,823-3,013 crore.

It must be noted that the year-on-year figures are not entirely comparable as Dr Reddy's earnings were boosted by exclusivity of Zyprexa generic in the year ago quarter.

Teva Pharmaceutical Industries and Dr Reddy's had in Oct 2011 launched a generic version of Eli Lilly's Zyprexa (schizophrenia treatment drug) and were awarded a 180-day period of marketing exclusivity.

The company's EBITDA in Oct-Dec is expected to decline 20 percent from a year ago to Rs 606 crore, while operating profit margin will likely contract to 21 percent from 27 percent.

Analysts expect Dr Reddy's base US business to grow 25 percent in US dollar terms. Full quarter contributions from Lipitor generic/Toprol XL and already launched products like the generic version of Zyprexa, and Augmentin among others is expected to drive accelerated growth in the second half of the current financial year.

Russia and the CIS region is also expected to continue its growth momentum. The two regions reported sales growth of 11 percent and 31 percent respectively in the second quarter.

The domestic formulations business is also seen improving on recent field-force realignment.

KEY THINGS TO WATCH

-- Growth in the US generic business and in other regions
-- Growth at Betapharm. The German arm's Q2 sales declined 11 percent
-- US market share for key generic drugs like Lipitor and Toprol XL
-- Domestic formulations business
-- Margins for the quarter
-- Outlook for Q4 and FY14
-- New launches/ANDAs (abbreviated new drug applications) going ahead

STOCK WATCH

Dr Reddy' shares close down 0.5 percent at Rs 1,905.20 on NSE on Wednesday. The stock is up near 16 percent since Sept-end.

"Traction in the US, branded formulations and PSAI (pharmaceutical services and active ingredients) businesses would be the key growth drivers for Dr Reddy's for FY13. We believe that with strong growth visibility for FY13, the stock is poised to give reasonable returns," said brokerage Motilal Oswal. It has a "buy" rating on the stock.

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