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Dr Reddy's Labs Q3 net beats f'casts on U.S. sales

Source : REUTERS
Last Updated: Fri, Feb 03, 2012 11:32 hrs
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Dr Reddy's Laboratories, India's No. 2 drugmaker by sales, reported a forecast-beating 88 percent jump in quarterly net profit as sales in its key U.S. market more than doubled.

Dr Reddy's , which makes generic molecules and pharmaceutical ingredients, said consolidated net profit rose to 5.13 billion rupees in October-December compared with 2.73 billion rupees a year earlier.



Income from sales and services grew 46 percent to 27.7 billion rupees.

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The launch of the generic version of Eli Lilly & Co's schizophrenia treatment drug Zyprexa in the U.S., in October, powered the surge in sales growth, Dr Reddy's said.

Dr Reddy's and Teva Pharmaceutical jointly enjoy a 180-day-exlcusivity to sell this $3.2-billion-a-year drug in the United States.

Analysts' expectations were for a net profit of 3.99 billion rupees on sales of 24.42 billion rupees, Thomson Reuters StarMine data showed.

The drugmaker, which draws nearly half of its revenue from North America, also benefited from a sharp drop in the value of the rupee in the December quarter.

Its North American formulations sales more than doubled to 11.11 billion rupees in the quarter when the Indian rupee fell more than 7 percent versus the U.S. dollar.

Shares in Dr Reddy's, valued at $5.63 billion, closed 2.4 percent higher at 1,670.75 rupees on Friday, in a firm Mumbai market .BSESN.

"The numbers are ahead of estimates simply because of the marketing exclusivity for generic Zyprexa in the U.S., while other regions are just in-line with expectations," Sushant Dalmia, analyst at Pinc Research, said.

"Going forward, the U.S. should continue to grow strong and would be a saviour... while other regions are facing (growth) troubles."

Indian drugmakers, which account for about a third of U.S. applications for approval to sell generics, are expected to add$2 billion to $2.5 billion in U.S. sales in the next five years, doubling their U.S. revenue, Morgan Stanley said in a report.

Drugs worth more than $140 billion are likely to go off patent in the next five years.

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In the next few years, Dr Reddy's, along with its peers Ranbaxy Laboratories, Sun Pharmaceutical Industries and Lupin Ltd will compete for a host of big-ticket drugs losing patent protection.

These include Forest's Alzheimer's drug Namenda, anti-depressant Lexapro, and the blood clot drug Plavix, sold jointly by Bristol-Myers Squibb Co and Sanofi.

Dr Reddy's formulation sales in European and Russian markets rose 14 percent and 15 percent, respectively.

India sales grew 11 percent to 3.33 billion rupees while global income from manufacturing services and pharmaceutical ingredients grew 12 percent to 5.56 billion rupees.

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