Dr Reddy’s ready to carpet-bomb US

With the first half of the 180-day exclusivity over anti-psychotic drug olanzapine providing the much-awaited boost to its topline, pharmaceuticals major Dr Reddy’s is chalking out plans to take a bigger bite of the US market.

The company is lining up a strong product portfolio for the next six months in a bid to take advantage of the patent cliff facing innovators.

“There are going to be certain important product launches in the next six months. These are going to drive the US market for the company,” said Satish Reddy, DRL’s chief operating officer.

The company also expects the olanzapine (generic Zyprexa) to continue to pump up the topline for the fourth quarter as well.

Launched in October 2011, olanzapine has significantly added to the company’s topline for the third quarter ended December 2011. The product, which has been marketed in partnership with Teva in the US, has raked in about $99 million in revenue for the quarter.

Reddy refused to name the products that are being readied for the launch in the next six months, but confirmed that the much awaited generic versions of products like Lipitor, Plavix, Seroquel and Geodon have been factored into the launch plan.

For the quarter ended December, the company reported the highest ever quarterly sales and profit with the topline up about 46% year on year at `2,770 crore and bottomline jumping over 90% to `520.9 crore. Earnings before interest, tax, depreciation and amortisation, or Ebitda, was up 33%, though the company sees this as a one-time phenomenon.

“We don’t see the gross margins remaining at that level in the quarters to come. We should go back to our earlier levels of about 21-22%,” said Umang Vohra, the company’s CFO.

Though the company has a mix of revenues from global generics, active pharmaceutical ingredients and others, the sales are largely driven by the US market. The North American market contributed about 46% of the company’s sales, while Europe, India, Russia all accounted for less than 20%.

“Russia had an issue in terms of delay in winter season. Though the inventory was available with the traders for some of the seasonal products, the delay in winter has not provided the much expected benefit. However, the sales in January 2012 are already showing up,” said Reddy.

The local market, where the company has been facing sales force related issues, is said to be improving, though the key sales indicators are still low compared to their original levels.

“It is going to take one or two quarters more for us to match the growth rates in the domestic market,” said Vohra.