Dr Reddy’s profit drops by 28.86 percent in Q3 of FY 2017-18

New Delhi: Leading pharma firm, Dr Reddy’s Laboratories reported a 28.86 percent year on year (YoY) drop in net profit at Rs 334 crore for the December quarter. The company said the numbers were impacted by one-time charge of Rs 93 crore due to deferred tax on assets and liabilities of the US entity.

The company had reported a net profit of Rs 470.01 crore in the corresponding quarter of last year.

Commenting on the results, CEO and Co-chairman, G.V. Prasad said “We had a satisfactory third quarter performance, with all our key markets performing well. We recorded sequential revenue growth of 7%, despite continuing challenges such as price erosion in the U.S. Our first-cycle NDA approval of Impoyz™ is a significant milestone in the commercialization of our proprietary products pipeline. We will continue our focus on operational excellence and controlling of SG&A costs across the organization”.

Revenue for the quarter came in at Rs 3806 crore, which was up 7 percent on YoY basis and 3 percent on the sequential basis. Gross margin for the quarter fell to 53.3 percent from 59.1 percent in the year-ago quarter, but were above the market expectations. During the quarter, the company incurred Rs 467 crore on research and development, which accounted for 12.3 percent of revenues.

Gross profit margins were, in fact, up nearly 300 basis points sequentially, aided by better product mix and a milestone receipt of Rs 130 crore in proprietary products. On the other hand, the YoY fall in gross profit margin was down due to higher price erosions, increased competitive intensity in some of the company’s key molecules in the US and adverse foreign exchange, the company said in a BSE filing.