Dr Reddy’s Q4 net profit rises 36% to ₹1,307 crore, surpasses market expectations

In an exchange filing, the Hyderabad-based company said that revenue increased to ₹7,083 crore during the quarter, a 12% year-on-year (YoY) growth, fuelled by solid sales in North America and emerging markets. 

Analysts polled by Bloomberg had estimated revenues of ₹7,026.5 crore and a net profit of ₹1,214.8 crore for the quarter in consideration.

“Our growth and profitability in FY24 has been driven by our performance in the US. We have also made significant progress on future growth drivers through licensing, collaboration, and pipeline building,” said G V Prasad, co-chairman & MD, DRL.

For the full year FY24, DRL reported a net profit of ₹5,568.4 crore, a 36% increase, and total revenues of ₹27,920 crore, up 14% on year, again led by performances in North America, Europe, and emerging markets.

“We expect FY25 will be consistent to allow a double-digit growth with a 25% Ebitda (on average) and believe that we will go double digit in the US…We are optimistic as we are planning to launch new products across markets consistently,” said Erez Israeli, CEO, DRL.

The company reported earnings before interest, taxes, depreciation, and amortization (Ebitda) of ₹1,872 crore for the March quarter, translating to an Ebitda margin of 25.4%. 

Research and development expenses were ₹690 crore, focusing on the biosimilar products pipeline and development efforts across generics and novel oncology assets. Capital expenditure for Q4FY24 was ₹500 crore, reaching ₹1,517 crore for the entire year, with a free cash flow of ₹1,910 crore and a net cash surplus of ₹6,460 crore, according to an exchange filing by the company.

“We will be directing our capex for FY25 primarily towards the products that we want to launch in the next few years. So the investment will be in the area of biologics, both for the biosimilar programs as well as for CDMO. In addition to that, we have a set of products that we want to launch in the future. It will require some increase of capacity in both API as well as see the injectables , and the third one will be in the area of digital,” added Israeli.

During the quarter under review, the global generics segment, which is DRL’s mainstay, saw a 13% revenue increase to ₹6,120 crore. This was mainly due to higher base business volumes and new product launches, although domestic generics sales fell by 12% to ₹1,126 crore.

“So, the decline was on account of the brand divestment income, but we feel good about how the base business is shaping up,” said MV Ramana, CEO of branded markets (India & emerging markets) of DRL.

In North America, which accounted for 46% of global sales, revenue soared by 29% to ₹3,262 crore, significantly influenced by the drug Revlimid and five new product launches.

In Europe, generics sales rose by 5% to ₹520 crore, led by the UK and Germany, bolstered by six new product launches. Meanwhile, revenue from emerging markets fell by 9% to ₹1,210 crore, despite 17 new product launches.

Revenue from Russia dropped 4% to ₹500 crore, due to unfavourable currency exchange rate movements. At the same time, Rest of the World (RoW) revenues grew 34% YoY to ₹490 crore, largely due to contributions from new products.

The Pharmaceutical Services and Active Ingredients (PSAI) segment reported a 6% growth in revenue to ₹820 crore. 

During the quarter, DRL also formed a joint venture with Nestle India to introduce innovative nutraceutical brands in India and other territories, and partnered with Sanofi to promote and distribute its vaccine brands, and with Bayer to distribute Vericiguat, a heart failure management drug in India. 

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Published: 07 May 2024, 07:07 PM IST