The Hindu Business Line : Dr Reddy’s Q1 net more than doubles

Hyderabad, July 21 Dr Reddy’s Laboratories’ net more than doubled and the turnover increased 21 per cent for the first quarter ended June 30, riding on growth in generic business in North America, restructuring of research, and improvement in Betapharm performance in Germany.

The Vice-Chairman and Chief Executive Officer of Dr Reddy’s, Mr G.V. Prasad, said the US business registered an upside with Sumatriptan aiding the good performance. North America contributed 39 per cent of revenues, up from 26 per cent.

Mr K. Satish Reddy, Managing Director and Chief Operating Officer, told a press conference on Tuesday that the restructuring process, including discovery business and operations in Hyderabad, shutting down of the Atlanta office, and changes to the German business, aided in the growth. The momentum would continue, he said.

The company’s foreign exchange losses were Rs 8.4 crore against Rs 17.6 crore in the corresponding quarter last year. The closure of the Atlanta research centre at a cost of $1.5 million will potentially save up to $5 million a year and the one-time severance package offered to employees in Betapharm cost the company about €7 million.

The company launched 24 new generic products and filed 22 new generic product registrations. The second half would see more product launches by the company.

“This is a year of consolidation and the focus is on strengthening the business in the US and Europe, in the latter, the approach to sourcing drugs in being changed to tenders. There are about 67 products pending approvals,” Mr Prasad said.

$100-million capex

Mr Prasad said the company expected a capital expenditure of $100 million during the year, with a significant part of it for the two special economic zones (SEZs) coming up in Andhra Pradesh. The investment in the SEZs could go up to $200 million.

The SEZs would be ready in 24 months and yield results by the third year. While the Srikakulam facility will focus on APIs (Active Pharmaceutical Ingredients) and custom manufacturing, the Sadasivpet SEZ would focus on finished drugs and formulations.

The stock ended marginally weak at Rs 789.55 (Rs 790.95) on the BSE on Tuesday.