Dr Reddy’s posts profit in Q3 but misses forecast

21 Jan 2009

Drug maker Dr Reddy’s Laboratories Ltd posted a quarterly net profit from a loss a year ago, lifted by the launch of a new generic in the US, but missed forecasts due to lower earnings from Europe. The firm launched its acute migraine drug Sumatriptan, a generic of GlaxoSmithKline Plc.’s Imitrex, in the US market in the December quarter, helping it almost quadruple its revenue from North America to $137 million (Rs 671.3 crore).

 

But earnings from Dr Reddy’s Europe business fell, mainly due to a drop of 2% in Betapharm Arzneimittel GmbH revenue to $41 million as volume growth in existing products was offset by declining prices. Dr Reddy’s posted a net profit of Rs192 crore for the three months to December, compared with a net loss of Rs121 crore in the year-ago period.

 

Germany’s Betapharm, which Dr Reddy’s bought in 2006 for $572 million, has been facing supply constraints and falling prices. Dr Reddy’s has moved Betapharm’s main manufacturing unit to India and other facilities in Europe to cut costs. In December, Betapharm preliminarily won eight supply contracts in a tender by Germany’s largest health insurer, Allgemeine Ortskrankenkasse (AOK). This would boost volumes but at lower margins.

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