Sumatriptan cures Reddy’s migraine

Cost-saving initiatives, a growing market for drugs in India, a fall in raw material prices and an upside due to migraine drug Sumatriptan doing well in the US combined to lift Dr Reddy’s Laboratories’ net profit 120% to Rs 244.5 crore in the first quarter of the current fiscal as against Rs 111.1 crore in the previous comparable period.

Revenues in the reporting quarter rose 21% at Rs 1,818 crore as against Rs 1,503 crore earlier.

“The growth in sales was largely driven by Sumatriptan. Excluding revenues from Sumatriptan, the company reported an overall year-on-year growth of 7% and 42% in sales from North America,” G V Prasad, vice-chairman and chief executive officer of DRL, said.

However, the growth story had some setbacks in Germany and Russia —- both markets regressed. Revenues from Europe (primarily Germany) were at Rs 210 crore during the quarter as against Rs 300 crore in the previous year’s Q1 representing de-growth of about 30%.

Revenues from Betapharm decreased by 36% to Rs 160 crore as against Rs 250 crore in the corresponding period. “The decrease in the German market is on account of the effect of destocking in the market. We have commenced supplies to the insurance major AOK. With this, the AOK products have witnessed significant increase in volumes while the volumes of non-AOK products have fallen,” DRL’s MD Satish Reddy said.

On the Betapharm front, the firm claims to have made significant progress in putting the ailing company back on rails. The company has discharged its sales force. From 250, the staff strength in the German firm is now at 50. The company has provided for the social costs of the terminated staff to the extent of 7 million euros in the current quarter.

The tie up GlaxoSmithKline (GSK) is expected to have an impact on the topline in the next 12 to 18 months.

We are working on the portfolio of products to be sold through GSK and the markets to be tapped. Though the supplies would begin this year, it would not be much. The actual impact would be seen only in the next 12 to 18 months,” Prasad said. The company had guided a revenue growth of 10% in the current financial year and it remains confident of meeting it.

The launch of Omeprazole Mg in the US and the expected growth of about 14% in the Indian market are expected to keep the momentum going.