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Dr. Reddy's (RDY) Q1 Earnings and Revenues Rise Y/Y

Zacks Equity Research

Although the earnings season is coming to a close, a few companies are yet to report their results. Earlier this week, Dr. Reddy’s Laboratories (RDY) reported its first-quarter fiscal 2015 (ended Jun 30, 2014) results.

Dr. Reddy’s reported first-quarter fiscal 2015 earnings per American Depositary Share (ADS) of 54 cents, up 52% from the year-ago period.

The company reported revenues of $586 million during the quarter, up 24% from the year-ago period.

The Quarter in Detail

Dr. Reddy’s reported revenues under three segments – Global Generics, Pharmaceutical Services & Active Ingredients (:PSAI) and Proprietary Products and Others.

Global Generics segment revenues grew 32% year over year to $483 million. Strong sales in North America and some emerging markets primarily boosted Global Generics segment revenues.

Generics revenues increased in North America, Russia, emerging markets (excluding Russia) and India. In North America, injectable products performed well due to the absence of competition. Additionally, the company increased market share for some of its key products including generic versions of Toprol and Geodon.

In the reported quarter, PSAI revenues decreased 6% to $92 million primarily due to lower demand and fewer customer launch plans. Revenues in the Proprietary Products and Others segment fell 6% to $11 million.

During the reported quarter, Dr. Reddy’s launched 25 new generic products.

Selling, general and administrative (SG&A) expenses amounted to $178 million, up 21% year over year. The increase was due to annual increments, additional labor deployment, marketing expenses and unfavorable impact of currency fluctuation. Research and development (R&D) expenses surged 59% to $65 million driven by planned R&D activities.

In the reported quarter, Dr. Reddy’s filed 9 products in the U.S. The company has 70 abbreviated new drug applications (ANDAs) pending FDA approval, out of which 42 are Para IV filings and 8 are “first-to-file”.

We are pleased with the performance of the Generic segment in North America, India and emerging markets. Dr. Reddy’s is successfully advancing toward developing a portfolio consisting of several generics and limited competition products.

Dr. Reddy’s carries a Zacks Rank #2 (Buy). Some other well-ranked stocks in the health care sector are Mallinckrodt plc (MNK), Salix Pharmaceuticals (SLXP) and Alexion Pharmaceuticals Inc. (ALXN). While Mallinckrodt and Salix carry a Zacks Rank #1 (Strong Buy), Alexion holds a Zacks Rank #2 (Buy).

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