Dr. Reddy’s Laboratories reported consolidated net profit declined a tad year on year to ₹1,392.4 crore in the June quarter even as revenue from operations rose almost 14% to ₹7,696.1 crore.

Higher expenditure, primarily towards purchase of stock-in trade and under the ‘other expenses’ head as well as stiffening competition, continuing price erosion and unfavourable foreign exchange in important markets had a bearing on the generic drugmaker’s first quarter performance. In the corresponding period of previous fiscal, it had posted ₹1,405 crore net profit and ₹6,757.9 crore revenue from operations.

Revenue from mainstay global generics rose ₹6,892.9 crore (₹6,013 crore). The y-o-y growth was primarily volume led, aided by new launches and integration of recently in-licensed vaccine portfolio in India, partially offset by price erosion, Dr. Reddy’s said on the results prepared as per Indian Accounting Standards (Ind AS).

“We had a good start to the new fiscal and our growth and profitability was mainly driven by our generics business. We continue to strengthen our core businesses and have made strategic investments in biologics, consumer healthcare and innovation...” co-chairman and MD G.V.Prasad said in a release on the results.

In the all important North America market as well as Europe, the growth was driven largely on account of increase in volumes of base business, contribution from new launches but partly offset by price erosion.

In India, the growth was on account of new product launches, including the recently in-licensed vaccine portfolio (of Sanofi), while in Emerging Markets growth due to market share expansion and new product launches was partly offset by unfavourable forex and price erosion. In Russia, revenues declined YoY mainly due to unfavourable currency exchange rate movements, partially offset by price increases and higher base business volumes.

Stock split

At Saturday’s meeting, Dr. Reddy’s Board approved the sub-division/ split of each equity share (face value of ₹5 each) into 5 equity shares having face value of Re.1 each by alteration of the Capital Clause of the Memorandum of Association of the company. Each American Depositary Share (ADS) of the company will continue to represent 1 underlying equity share as at present and therefore, the number of ADSs held by an American Depositary Receipt holder would consequently increase in proportion to the increase in number of equity shares.

It also approved fund infusion of upto GBP 500 million, by way of investment in preference shares, into Dr. Reddy’s Laboratories SA, Switzerland to enable the subsidiary to acquire shares of Haleon group company Northstar Switzerland SARL. Dr. Reddy’s had in June announced signing of a definitive agreement to acquire Haleon’s global portfolio of consumer healthcare brands in the nicotine replacement therapy category outside of the U.S.