Dr Reddy’s posts Rs 570-cr net loss due to heavy impairment charge

28/01/2020

Hyderabad: In a complete reversal of analyst expectations, drug major Dr Reddy's Laboratories Limited has reported a net loss of Rs 569.7 crore for the quarter ended December 2019 due to a massive impairment charge of Rs 1,320 crore, and despite a reasonable growth in revenues during the period.
The company's profit before tax stood at Rs 580.5 crore with a net profit of Rs 485.2 crore in the corresponding quarter previous year. According to the company, the launch of a competing version of its product Nuvaring and authorised generic launches in December 2019 led to a considerable erosion in the value of Dr Reddy's Nuvaring product, prompting the company to take an impairment charge of Rs 1,110 crore. In addition to this it has taken an impairment charge of Rs 210 crore on other products considering the current market dynamics, the company said. Revenues rose 14 per cent to Rs 4,383.8 crore, driven by global generics business in emerging markets, India and Europe. These geographies delivered a growth of 19 per cent, 13 per cent and 52 per cent respectively. The global generics sales in the US market, which accounts for 36 per cent of the total revenues, grew 8 per cent to Rs 1,599.9 crore from Rs 1,483.2 crore a year ago. Revenues from Pharmaceutical services and active ingredients (PSAI) segment were up 16 per cent to Rs 690.6 crore, while the proprietary products' segment revenues declined 18 per cent to Rs 100 crore from Rs 121 crore in the corresponding previous quarter.
On a sequential basis, sales revenues of Rs 4,383.8 crore declined by 9 per cent as there was a one-off revenue of Rs 720 crore from the out-licensing of its two neuro products during the September 2019 quarter. "Adjusted for this, the sequential quarter growth is 7 per cent and is highest ever quarterly sales from operations, without any one-off items," Dr Reddy's said.
Revenues of Rs 3,509 crore from global generics gre 15 per cent year-on-year and 9 per cent on a sequential basis. The company's North American revenues grew by 8 per cent over the year ago period and by 12 per cent sequentially, largely on account of higher volumes in some of the company's key molecules, though the gains were partly offset by price erosion.
In emerging markets, revenues from Russia and CIS countries and Romania grew 20 per cent and 26 per cent, at Rs 490 crore and Rs 180 crore, respectively. The domestic revenues of Rs 760 crore with a year-on-year growth of 13 per cent came on the back of improved realisations in base business and volume traction, the company said.

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