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Dr. Reddy's (RDY) Q1 Earnings and Revenues Decline Y/Y
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Dr. Reddy's Laboratories Ltd. (RDY - Free Report) reported first-quarter fiscal 2017 earnings per American Depositary Share (ADS) of 11 cents, down 79.6% from the year over year.
Moreover, revenues of $479 million reflected a 14% decline from the prior-year quarter primarily due to sluggish volume growth in the U.S. and continually constrained operations in Venezuela.
The Quarter in Detail
Dr. Reddy’s reports revenues under three segments – Global Generics, Pharmaceutical Services & Active Ingredients (PSAI), and Proprietary Products and Others.
Global Generics revenues declined almost 14% year over year to $395 million, due to lower contribution from North America and loss of sales in Venezuela.
Revenues in North America were suffered due to increased competition for Valcyte and Vidaza, pricing pressure, and moderation in volumes uptake.
In the emerging markets, Russia, other CIS countries and Romania, and the Rest of World (RoW), the company recorded a 26% decline in revenues. However, India continued to perform well on the back of the integration of the portfolio acquired from UCB S.A. (UCBJF - Free Report) in the company’s supply chain, leading to a 10% year over year increase in revenues.
PSAI revenues were down 15.7% to $70 million, reflecting the impact of delayed dispatches on account of ongoing remedies and activities related to the FDA’s observations.
Revenues at the Proprietary Products and Others segment remained flat at $15 million.
In the reported quarter, the company launched two products – Zembrace Sym Touch (approved in Jan 2016) and Sernivo Spray (approved in Feb 2016) – in the U.S.
Research and development expenses increased 9.2% year over year to $71 million while selling, general and administrative expenses were $182 million, up 11.7%. This increase was primarily due to quality improvement initiatives and expenses related to the launches of Zembrace and Sernivo.
As of Jun 30, the company has 78 generic filings pending FDA approval (76 Abbreviated New Drug Applications (ANDAs) and 2 NDAs filed under the 505(b)(2) route), of which 50 were Para IV filings and 18 had “first-to-file” status.
Our Take
Dr. Reddy’s witnessed a year-over-year decline in both earnings and revenues during the first quarter of fiscal 2017. The weak quarterly performance was primarily due to competitive dynamics of the U.S. business, ongoing remediation activities on the API business and negligible contribution from Venezuela. Macroeconomic instability in some regions of the emerging markets and a depreciating ruble would continue to be major concerns going forward.
Nevertheless, we remain positive on the company’s efforts to expand its biosimilar portfolio, particularly in the emerging markets over the next few years.
Dr. Reddy’s currently has a Zacks Rank #2 (Strong Buy). A couple of other favorably ranked stocks in the health care sector are Bristol-Myers Squibb Company (BMY - Free Report) and Actelion Ltd. . Both stocks sport a Zack Rank #1 (Strong Buy).
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Dr. Reddy's (RDY) Q1 Earnings and Revenues Decline Y/Y
Dr. Reddy's Laboratories Ltd. (RDY - Free Report) reported first-quarter fiscal 2017 earnings per American Depositary Share (ADS) of 11 cents, down 79.6% from the year over year.
Moreover, revenues of $479 million reflected a 14% decline from the prior-year quarter primarily due to sluggish volume growth in the U.S. and continually constrained operations in Venezuela.
The Quarter in Detail
Dr. Reddy’s reports revenues under three segments – Global Generics, Pharmaceutical Services & Active Ingredients (PSAI), and Proprietary Products and Others.
Global Generics revenues declined almost 14% year over year to $395 million, due to lower contribution from North America and loss of sales in Venezuela.
Revenues in North America were suffered due to increased competition for Valcyte and Vidaza, pricing pressure, and moderation in volumes uptake.
In the emerging markets, Russia, other CIS countries and Romania, and the Rest of World (RoW), the company recorded a 26% decline in revenues. However, India continued to perform well on the back of the integration of the portfolio acquired from UCB S.A. (UCBJF - Free Report) in the company’s supply chain, leading to a 10% year over year increase in revenues.
PSAI revenues were down 15.7% to $70 million, reflecting the impact of delayed dispatches on account of ongoing remedies and activities related to the FDA’s observations.
Revenues at the Proprietary Products and Others segment remained flat at $15 million.
In the reported quarter, the company launched two products – Zembrace Sym Touch (approved in Jan 2016) and Sernivo Spray (approved in Feb 2016) – in the U.S.
DOCTOR REDDYS Price
DOCTOR REDDYS Price | DOCTOR REDDYS Quote
Research and development expenses increased 9.2% year over year to $71 million while selling, general and administrative expenses were $182 million, up 11.7%. This increase was primarily due to quality improvement initiatives and expenses related to the launches of Zembrace and Sernivo.
As of Jun 30, the company has 78 generic filings pending FDA approval (76 Abbreviated New Drug Applications (ANDAs) and 2 NDAs filed under the 505(b)(2) route), of which 50 were Para IV filings and 18 had “first-to-file” status.
Our Take
Dr. Reddy’s witnessed a year-over-year decline in both earnings and revenues during the first quarter of fiscal 2017. The weak quarterly performance was primarily due to competitive dynamics of the U.S. business, ongoing remediation activities on the API business and negligible contribution from Venezuela. Macroeconomic instability in some regions of the emerging markets and a depreciating ruble would continue to be major concerns going forward.
Nevertheless, we remain positive on the company’s efforts to expand its biosimilar portfolio, particularly in the emerging markets over the next few years.
Dr. Reddy’s currently has a Zacks Rank #2 (Strong Buy). A couple of other favorably ranked stocks in the health care sector are Bristol-Myers Squibb Company (BMY - Free Report) and Actelion Ltd. . Both stocks sport a Zack Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>