Indian drugmaker Dr Reddy’s Laboratories posted a strong gain in profits in its fiscal second quarter, although revenue growth was held back by pricing pressures in the US market for generic drugs, particularly for its once big-selling fluoxetine antidepressant.
Dr Reddy’s said revenues for the quarter came in at 5.8 billion rupees ($129 million), a 7% rise year-on-year, driven by a good performance in Europe for its generic product lines. Net profit also rose – by nearly three quarters – to 890 million rupees, helped by reined in R&D spending.
North American revenues plummeted to 299 million rupees, down from 715 million rupees a year earlier, with combined revenues from fluoxetine capsules and muscle relaxant tizanidine tablets dropping to 93 million rupees from 436 million rupees.
Europe generics revenues rose a healthy 46% to 473 million rupees, led by higher prices for key products such as the gastrointestinal drug omeprazole and blood pressure treatment amlodipine maleate, as well as the launch of antihistamine terbinafine.
In 2003, Dr Reddy’s announced a major shift in business model to increase its R&D budget in order to carry out more novel, in-house research, although the company has retreated somewhat from this strategy of late in the face of escalating research costs. R&D spending dropped 29% to 444 million rupees.
Meanwhile, Dr Reddy’s is the latest in a series of generic companies to cite impact of increased competition in the US market for generics drugs in the third quarter of calendar 2005. Dr Reddy’s rival Ranbaxy Laboratories blamed US pricing for its 91% reduction in third quarter profit [[24/10/05c]]. Meanwhile, last week US generic firm Mylan Laboratories also said this held back its performance in the quarter [[28/10/05k]].