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DRL profit surges on favourable U.S. winds

Sale of rights for three brands, tax cuts help pharma major’s net rise 67%

Dr. Reddy’s Laboratories Ltd. has posted a more than 67% increase in consolidated net profit to ₹455.5 crore for the quarter ended March.

The increase from the ₹272.1 crore of the year-earlier period came on the back of better contributions from India and emerging markets, a reduction in tax rate in the U.S., besides sale and assignment of U.S. rights for three dermatology brands by the company.

The North America market, however, was subdued with price erosion on major products of DRL.

Total income, as per the results prepared under the Indian Accounting Standards (Ind AS), was ₹4,112.9 crore, or a little over 14%, higher from the ₹3,598.8 crore in the corresponding period of the previous fiscal.

CEO and co-chairman G.V. Prasad said that improved performance was also a factor behind the growth.

For 2018-19, the company’s net profit more than doubled to ₹1,950 crore (₹946.8 crore), while the total income was ₹15,448.2 crore (₹14,281 crore).

“It has been a good year with a significant turnaround in the financial performance and steady progress on the quality front,” said Mr. Prasad. According to the notes accompanying the results, the company had recognised ₹180.7 crore as revenue, while ₹15.9 crore represented the profit on sale of intangible assets after adjustment of associated costs towards the sale of three dermatology brands.

On the change in the tax rate during the quarter, CFO Saumen Chakraborty said it was 16.4% against 19.4% in the year earlier period.

He said revenue from generics in North America grew 3% year-on-year during the quarter ended March to ₹1,500 crore while for the year it remained flat at ₹6,000 crore. Revenue from emerging markets increased 41% during the quarter to ₹360 crore and by 28% for the year to ₹2,890 crore. The increase in revenue from India was 6% to ₹650 crore and 12% to ₹2,620 crore respectively.

During the year, the company launched 24 new products in the U.S. and this fiscal, the number would be 20, he said. On research and development spend, he said investment on R&D was lower at ₹1,561 crore (₹1,826 crore) and so was the case with capital expenditure at ₹696 crore (₹925 crore).

The board of directors have recommended a dividend of ₹20 per equity share (face value of ₹5 each) for 2018-19.

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