Dr. Reddy's Laboratories (
reported second-quarter fiscal 2014 (ended Sep 30, 2013)
earnings per American Depositary Share (ADS) of 65 cents, above
the Zacks Consensus Estimate of 45 cents and the year-ago
earnings of 37 cents per ADS.
The company reported revenues of $537 million during the
quarter, reflecting year-over-year increase of 17%. However,
revenues missed the Zacks Consensus Estimate of $543 million.
Dr. Reddy's launched 19 new generic products, filed 13
registrations for new products, apart from filing 8 drug master
files (DMFs) across the globe in the second quarter.
Quarter in Detail
Dr. Reddy's reports revenues under three segments - Global
Generics, Pharmaceutical Services & Active Ingredients (PSAI)
and Proprietary Products and Others. Revenues at the Global
Generics segment rose 32% to $424 million. Strong sales in North
America, Russia and emerging markets led to the growth at the
Global Generics division. Strong sales of the generic versions of
Vidaza, Dacogen, Aricept and Depakote ER (launched during
the reported quarter) boosted segmental results.
Generics revenues increased in North America (43%), Russia and
other CIS (Commonwealth of Independent States) markets (44%),
rest of the world, or RoW (36%), India (8%). Revenues in India
were affected by trade disruptions and the new pricing policy.
Revenues in Europe declined 1%.
PSAI revenues fell 19% to $102 million during the quarter. The
decline in this segment was due to a fewer number of new product
launches. Revenues in the Proprietary Products and Others segment
declined 25% to $10 million during the quarter.
Selling, general and administration (SG&A) expenses
including amortization amounted to $156 million, reflecting an
increase of 21% year over year. The improvement can be attributed
to select brand building activities in the Emerging Markets.
Research and development (R&D) expenses increased 48% to $71
Dr. Reddy's filed 4 abbreviated new drug applications (ANDAs)
with the U.S. Food and Drug Administration (FDA) in the reported
quarter. The company has 62 ANDAs pending approval with the FDA,
of which 39 are Para IV filings and 9 are first-to-file.
Dr. Reddy's carries a Zacks Rank #3 (Hold). We are pleased by
the growth of global generics segment. Recent launches have also
contributed to growth. Dr. Reddy's strategy to expand its R&D
activities will drive future growth. Currently, companies like
Isis Pharmaceuticals, Inc.
AMAG Pharmaceuticals Inc.
) look more attractive with a Zacks Rank #1 (Strong Buy).
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