India-based pharmaceutical company Dr. Reddy's Laboratories Ltd. (RDY) reported Wednesday a loss for the third quarter, compared to a profit last year, reflecting mainly charges related to the carrying value of goodwill and intangibles of betapharm, its German operation. Revenues decreased 6% from last year. However, excluding revenues from sumatriptan last year, third-quarter revenues grew year-on-year driven by key markets of India and Russia.
Loss for the third quarter attributable to equity holders of the company was US$112 million or US$0.7 per share, compared to a profit of US$53 million or US$0.3 per share in the previous year. In terms of Indian Rupees, loss was INR5.22 billion or INR30.9 per share, in comparison with a profit of INR 2.44 billion or INR14.5 per share a year ago. Adjusted profit after tax was US$50 million or US$0.29 per share.
The company noted that the quarter indicated a higher pace of transition to tender based model in German generics pharmaceutical market, with an associated deterioration in prices from the prior-year levels. This resulted in the testing of impairment of the carrying value of betapharm's goodwill and intangibles, and the company recorded a non-cash write-down of intangible assets and 'beta' brand amounting to EUR 48 million and a non-cash write-down of goodwill amounting to EUR 76 million. Augsburg, Germany headquartered generic pharmaceuticals company betapharm was acquired by Dr. Reddy's in 2006.
Revenues for the quarter decreased to US$373 million from US$397 million in the same quarter a year ago. In Indian Rupee terms, revenues were INR17.3 billion, down from INR18.4 billion in the prior year.
Segment-wise, revenues from Global Generics business were US$253 million, compared to US$295 million in the prior-year quarter. Revenues from Pharmaceutical Services & Active Ingredients increased 17% to US$113 million from US$96 million in the previous year.
Results from operating activities were a loss of US$128 million, in comparison with a profit of US$81 million in the preceding year.
Cost of revenues increased to US$183 million from US$175 million in the year earlier. Total operating expenses surged to US$318 million from US$140 million in the prior year. Operating expenses for the quarter include write down of intangible assets of US$74 million and write down of goodwill totaling US$111 million.
During the quarter, the company launched 27 new generic products, filed 16 new product registrations and filed 11 DMFs globally.
For the nine-month period, adjusted profit after tax was US$158 million, up from US$110 million in the same period last year. Adjusted earnings were US$0.93 per share. Consolidated revenues grew 9% year-over-year to US$1.2 billion.
RDY closed Tuesday's regular trading at $26.17 on the NYSE.
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