Forex Tailwinds, New Product Launches Drive Dr Reddy’s PAT Up By 77% At Rs 1,247 Crore In Q3

Driven by forex gains and new product launches, Dr Reddy's Laboratories Ltd’s consolidated profit after tax (PAT) for the quarter ended December 31, 2022 was up by 77 per cent at Rs 1,247.1 crore as against Rs 706.5 crore in the same quarter a year ago, company officials said on Wednesday.

Dr Reddy's Chief Financial officer Parag Agarwal told reporters that revenues during the quarter were up by 27 per cent to Rs 6,770 crore compared to Rs 5,319.7 crore in the third quarter of FY '22.

“While we are pleased with the quarter’s performance, the important thing is that we are on track with our strategy… Our gross margin at 59.2 per cent during the quarter has been strong. This has been led by favourable new products mix, also to some extent aided by positive forex movement,” Agarwal told reporters.

Revenues from North America stood at Rs. 3060 crore a year-on-year growth of 64 per cent, driven by new products launches, increase in volumes and a favorable forex movement, which was partly offset by price erosion, he said.

The official said generic Revlimid, a multiple myeloma drug, which was launched in the USA in September last year has been contributing to the topline meaningfully.

“We had five new launched during the quarter. For the full year we expect to launch 25 new products in the North America,” he further said. 

The price erosion trends are broadly in line with what the company has seen during the past two quarters, he said.

Revenues from India were at Rs. 1130 crore a year-on-year growth of 10 per cent, driven by increase in sales prices and new product launches, partly offset by reduction in volumes for certain products, the official said.

Revenues from Emerging Markets grew by 14 per cent at Rs. 1310, while the Europe sales stood at Rs 430 crore up six per cent compared to the same quarter last fiscal driven by new product launches, increase in volumes which was partly offset by price erosion and adverse forex rates.

Revenues from the Pharmaceutical Services and Active Ingredients (PSAI) segment stood at Rs 780 crore in Q3FY23.

Dr Reddy’s spent Rs 480 crore towards Research and Development during the quarter.

The company had a free cash flow of about Rs 2000 crore during the quarter under discussion and it is expected to improve in the coming quarters.

“This obviously gives us very strong balance sheet that we would like to use for inorganic growth,” the CFO said.

The drug-maker will be investing Rs 1500 crore towards capex. 

Commenting on the results, co-chairman and MD of Dr Reddy's Laboratories G V Prasad in a press release said, "Our strong financial performance was supported by growth in the US and the Russia markets. We continue to strengthen our developmental pipeline to reach more patients globally.

During the third quarter, gross profit increased by approximately 545 basis points over the same period previous year driven mainly due to new product launches with higher margins, favourable products mix and favourable forex movement which was partly offset by price erosion, Dr Reddy’s said in the release.