DRL posts strong 77% profit growth to Rs 1,247 cr riding on US, Russia

Firm says sustained focus on improving productivity has also helped boost profits; DRL is now bullish on its biosimilars and hopes to start filing for them in US in the coming quarters

Hyderabad based Dr Reddy’s Laboratories posted a strong net profit growth of 77 per cent year on year to Rs 1,247 crore riding on the back of a 27 per cent rise in revenues largely driven by the North American and Russian markets. The company said its continued focus on improving productivity has also helped boost the profits.

DRL is now bullish on its biosimilars business and hopes to start filing for these products in the US in the coming quarters, and has also finished the phase one clinical trials of tocilizumab, a monoclonal antibody used for the treatment of rheumatoid arthritis.

DRL’s revenues for the third quarter touched Rs 6,770 crore, while its gross margins came in at 59.2 per cent. The stock was down 1.1 per cent on the BSE.

Parag Agarwal, CFO, DRL said the healthy gross margin was aided by forex movement and the product mix.

The company’s North America business, which constitutes 45 per cent of its consolidated revenues, grew by 64 per cent during the quarter to Rs 3,056 crore. DRL’s India business grew 10 per cent YoY, driven by increase in sales prices and new product launches, partly offset by reduction in volumes for certain products.

The firm's North America business was already on a high base in the second quarter FY23 due to the launch of generic Revlimid (cancer drug). However, DRL posted a sequential growth of 9 per cent in North America.

Revenues from emerging markets stood at Rs 1,310 crore, growing 14 per cent YoY. Of this, revenues from Russia came in at Rs 690 crore, up 45 per cent YoY, aided by increase in volumes and prices, new product launches and favourable forex rates. Agarwal said that in Russia the biosimilars tender business as well as the base business both did well during the quarter.

As for India, the company says that with the slash in prices of Novartis’ heart failure drug (which DRL sells under the brand Cidmus) they expect volumes to surge.