DRREDDY'S Laboratories (DRL), India's second-largest drug maker by sales, is upbeat on continued revenue growth for this fiscal backed by higher sales in the US market, new product launches and cost rationalisation. The drug marker beat street expectations for the quarter ended June, reporting a 21% rise in revenues at Rs 1,820 crore and a 120% increase in profits after tax (PAT) to Rs 240 crore.

The spurt in revenue and profits came on the back of sales of Sumatriptan, a generic migraine drug, in the North American and Indian markets. Some of DRL's competitors were unable to sell this drug in the US market due to regulatory issues, working to their advantage. The US market contributes to over a third of the firm's revenues.

DRL forecasted a 10% revenue growth for this fiscal. “We do not see any risk to guidance. New product launches, stronger product portfolio and a healthy order book would help us sustain the growth momentum,” said Satish Reddy, chief operating officer and managing director, DRL.

The quarter also saw a spurt in sales in Pharmaceutical Services and Active Ingredients. A drop in prices of key raw materials and the rupee depreciation against the dollar, boosted revenues in the segment, said Umang Vohra, CFO, DRL. But the pharma major continues to face intense competition and pricing pressures in the tender-turned German market and is yet to evolve a combating strategy.

DRL's German acquisition Betapharm was a drag on their profits for several quarters, forcing them to write off the value of intangibles. “We have trimmed costs by massive downsizing and shifting manufacturing base of key products from Germany to India,” said GV Prasad, vice chairman and chief executive officer, DRL. The company's scrip closed at Rs 789.55, falling by 0.18% on BSE on Tuesday.

Source :The Economic Times / 22nd July 2009