Pharma major Dr Reddy’s Laboratories on October 29 declared its financial results for the second quarter ended September 30, 2021. The company reported a consolidated profit after tax (PAT) of Rs 992 crore for the quarter, up 30% from Rs 762 crore reported in the corresponding period last year (adjusting for extra ordinaries of Rs 78 crore, the adjusted profit is Rs 840 crore).
Sequential growth in profit is 74% from Rs 571 crore in the quarter ended June 30, 2021.
The revenues came in higher by 18% at Rs 5,763 crore for the quarter, compared to Rs 4,897 crore in the same period last year. Sequentially, the consolidated revenue increased by 17% from Rs 4,919 crore reported in the previous quarter.
The revenues are higher due to growth in its generics business which grew 19% y-o-y across geographies and strong growth in its proprietary business which had a robust growth of 195% on an annualized basis albeit on a low base.
Commenting on the results, Co-Chairman & MD, G V Prasad said "I am pleased with the improvement in the financial performance across our businesses. While we continue to strengthen our core businesses of generics and APIs, we are also making investments in our long-term growth drivers and deeper innovation capabilities.”
The company’s focus remains on meeting unmet patient needs around the world in keeping with the organization’s purpose, he added.
Revenue & Geographical Mix
Revenue from global generics business came in higher at Rs 4,743 crore in this quarter compared to Rs 3,984 crore in the corresponding period last year. On a sequential basis, this business grew by 15% from Rs 4,111 crore on the back of higher contribution from COVID portfolio, new product launches and volume growth across markets. However, the company witnessed price erosion in some of its markets which restricted the growth.
North America continues to be the biggest contributor to the generics business contributing Rs 1,891 crore this quarter as against Rs 1,832 crore in the previous year, a y-o-y growth of 3%. Sequential growth was 9% from Rs 1,739 crore in the previous quarter.
The company has a strong product pipeline and said, “We filed two new ANDAs (Abbreviated New Drug Application) during the quarter. As of 30th September 2021, cumulatively 93 generic filings are pending for approval with the USFDA (90 ANDAs and 3 NDAs (New Drug Application) under S0S(b)(2) route). Out of these 93 pending filings, 46 are Para IVs and we believe 23 have 'First to File' status.”
Emerging markets grew smartly with a y-o-y growth of 50% to Rs 1,299 crore from Rs 864 crore and a q-o-q growth of 42% from Rs 912 crore.
India too grew strongly by 25% to Rs 1,140 crore from Rs 912 crore last year and by 8% on a sequential basis from Rs 1,060 crore, driven by increase in sales volumes of our existing products, including COVID products, new product launches and increase in sales price of existing products.
Europe on the other hand grew by 10% y-o-y to Rs 414 crore from Rs 375 crore. Sequentially it grew by 4% from Rs 399 crore, primarily on account of volume traction in base business and new product launches across markets, partially offset by price erosion.
Revenues from Pharmaceutical Services and Active Ingredients (PSAI) business fell marginally by 2% y-o-y from Rs 851 crore to Rs 837 crore, however this business grew 11% sequentially from Rs 754 crore.
Proprietary products and others contributed Rs 183 crore, growing 195% on a y-o-y basis from Rs 62 crore and by 238% q-o-q from Rs 54 crore on account of recognition of a license fee associated with the sale of our U.S. and Canada territory rights celecoxib oral solution, to BioDelivery Sciences International, Inc.
Margins
Gross margins for the quarter stood at 53.4%, down 50 bps from last year mainly on account of price erosion and lower export benefits. There was however, a sequential increase of 120 bps at the back of leverage benefit on manufacturing overheads, which was partially offset by price erosion.
EBITDA came in at Rs 1,560 crore and margins improved by 110 bps on an annualized basis to 27% in this quarter, and by 630 bps on a q-o-q basis.
Net margin was up by 160 bps y-o-y to 17.2% and 560 bps on a sequential basis.
The capex is planned at Rs 360 crore in this financial year and has a free cash flow of Rs 83 crore.
The stock closed at 4,659.2 today, up Rs 89.25 (1.95%) from its previous days close. This year the stock is trading below its last year’s levels, down 6% over last 1 year, down 10% this financial year and down 5% in last 1 month.
