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Dr. Reddy’s net dips

HYDERABAD: Dr. Reddy’s Laboratories posted a 50 per cent drop in profit in 2007-08 at Rs. 467.80 crore ($117 million) against Rs. 932.70 crore ($223 million) in 2006-07. The company posted Rs. 5,000 crore ($1.250 billion) revenues against Rs. 6,500 crore ($1.627 billion), a drop of 23 per cent.

Releasing the company’s results in accordance with USGAAP (generally accepted accounting practices) at a press conference here on Tuesday, CEO and Vice-Chairman, G. V. Prasad, said “We will deliver consistency in our topline and bottomline in future.” The company targets a growth of 25 per cent in revenues in the current fiscal.

K. Satish Reddy, Managing Director and COO, attributed the drop in profit to the absence of benefits due to upsides from authorised generics that were available to the company in 2006-07, higher rebates paid to insurance companies, pricing pressure and supply constraints with main supplier in Germany, Salutus, and decline in custom pharmaceutical services (CPS) due to delay in raw material supplies in Mexico.

The company’s revenues from North America, Germany and India crossed $200 million each, while they exceeded $100 million in Russia.

Amortisation expenses were put at Rs. 162 crore against Rs. 157 crore, largely due to amortisation of intangibles in Betapharm, acquisition of products in Spain and an acquisition in Mexico.

Apart from $140-million capital expenditure in 2007-08, the company acquired BASF (U.S.) for $38 million and Dowpharma (U.K.) for $34 million. A new research and development centre for APIs (active pharmaceutical ingredients) and generics was commissioned and the generics facility was expanded, said Mr. Prasad.

As part of its new ‘partly-restructured and partly-repositioned’ strategy, the company proposed to propel growth in global generics, pharmaceutical services (APIs and CPS) and innovation business. It planned to launch three products in the dermatology segment in the U.S.

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