Proceeds from a settlement pact with British drugmaker lndivior and its strategy of divesting brands to sharpen focus on core products aided pharma major Dr. Reddy’s Laboratories in reporting manifold increase in consolidated net profit to ₹1,189 crore for the first quarter.
Besides contributing to the sharp rise from ₹380.4 crore of the year-earlier period, the $72 million Suboxone settlement and divestment helped Dr. Reddy’s cushion the impact of lower COVID product sales, normalisation of Russian inventory build up and strengthening of Ruble.
Total income at ₹6,086.8 crore (₹5,503 crore) was an increase of more than 20% and boosted by Other income of ₹853.9 crore (₹107.9 crore). “We did face a number of challenges during the quarter... higher competitive intensity in a few of our products in North America, slowdown in Indian pharma market, inflationary pressure... however, successfully able to mitigate them by creating and monetising a number of opportunities,” CFO Parag Agarwal said on Thursday.
In notes accompanying the results, the company said it has recognised the present value of the amount receivable at ₹563.8 crore ($71.39 million discounted to present value) on the date of the settlement as 'Other income' in the consolidated financial results.
Income from operations declined to ₹4,818 crore (₹4,826 crore), according to the results prepared as per Indian Accounting Standards.
Members of Dr. Reddy's senior leadership in a media interaction said the company had identified some more brands for divestment and would proceed with the process on getting the right price. To queries, CEO Erez Israeli said trials of Covid-19 vaccine Sputnik as a booster shot were in last stages and a clear picture was likely to emerge by middle of August.
Mr. Agarwal said Dr. Reddy’s introduced six new products during the quarter in the key North American market, out of the 25 it proposes this fiscal.
“Our underlying business revenues adjusted for Covid products contribution during last year have grown well. The profits were aided by a few non-recurring incomes, offsetting the near term headwinds. We continue to improve the health of our core businesses through productivity improvement and robust product pipelines,” co-chairman and MD G.V.Prasad said in a release.