Dr Reddy's fiscal 2nd-qtr profits fall 4.5%

A 36.7% reduction in sales, to 12.67 billion rupees ($321.8 million) hurt fiscal second-quarter profits at Indian drugmaker Dr Reddy's Laboratories. Net income for the July to September period was 2.67 billion rupees, down 4.5% on the comparable three months in 2006. However, the firm's profit slump was not as bad as had been feared. Analysts surveyed by Dow Jones Newswires had predicted a fall of around 40%

Dr Reddy's drop in revenue was largely due to increased competition in the US market, particularly as exclusivity rights for certain generic drugs began to expire. For example, in the July to September period last year, US sales of the firm's generic versions of Merck & Co's cholesterol lowerer Zocor (simvastatin) and its benign prostatic hyperplasia drug Proscar (finasteride) contributed around 7.8 billion rupees.

Another factor affecting sales was the decline in revenues generated by Dr Reddy's German unit Betapharm, acquired last year (Marketletter April 24, 2006). Sales at the Augsburg-headquartered group fell 26.9% to 1.9 billion rupees due to a combination of ongoing supply constraints and the rupee's appreciation against the euro.