Venezuela Hits Dr. Reddy’s Profit, But Indicators Brighter
This article was originally published in PharmAsia News
Indian generic drug heavyweight Dr. Reddy’s quarterly net profit has tumbled nearly 90% on an exceptional charge involving a $65m write-down on receipts due from its Venezuelan subsidiary but improved financial performance indicators have cheered investors.
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Dr. Reddy’s Laboratories (DRL) has reported a slump in profits for the first quarter, dented by a decline in volume growth and pricing pressure in the US as well as a loss of business in Venezuela. While the firm's long term story appears intact, resolution of compliance issues at its Indian sites and product flows in the US and other markets (DRL expects to participate in a Russian tender for rituximab) could lift investor sentiment significantly.
First-quarter results of frontline Indian firms are expected to be a mixed bag as some are boosted by launches of products with marketing exclusivity in the US, while others are weighed down by increased competition and pricing erosion in the base business. Updates on compliance efforts at facilities and evolving regulations in India – the ban on certain fixed-dose combinations and controversial pricing orders – are other key issues to look out for.
For the last few years, Indian generic companies have been making headlines for all the wrong reasons, rapped by the US Food and Drug Administration over problems ranging from fudged test results to poor-quality manufacturing standards. But lately, the firms have been enjoying a run of good regulatory tidings, giving a fillip to their share prices.