Back to top

Image: Bigstock

Dr. Reddy's (RDY) Earnings & Revenues Decline Y/Y in Q3

Read MoreHide Full Article

Dr. Reddy's Laboratories Ltd. (RDY - Free Report) reported third-quarter fiscal 2017 earnings per American Depositary Share (ADS) of 42 cents, down 16% year over year.

While quarterly revenues declined 6.5% year over year to $546 million, they were up by 3% on a sequential basis.

Dr. Reddy’s share price inched up 0.3% over the past three months, while the Zacks classified Medical Generic Drugs industry gained 2.2%.

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 revenues fell 6% year over year to $451 million. However, on a local currency basis, revenues declined 9% due to lower contribution from North America and Venezuela.

Revenues in North America were down 15% year over year in local currency due to increased competition in valgancyclovir and the company’s injectables franchise, along with continuing pricing pressure. Additionally, in the reported quarter the company also launched five new products – Aripiprazole, Lamotrigene ODT, Fluoxetine Tabs, Raloxifene HCl and Nystatin-Triamcinolone Cream.

On a local currency basis, revenues climbed 11% in Europe, 2% in India and declined 7% in Emerging Markets.

While PSAI revenues were up 6.7% to $80 million on a year-over-year basis, it declined 7% (in local currency) from the second quarter. Revenues at the Proprietary Products and Others segment came in at $15 million, in line with the year-ago quarter.

Furthermore, research and development expenses jumped 21.7% year over year to $73 million. This increase was due to expenses associated with the IPR&D assets in-licensed from Xenoport and Eisai.

Also, selling, general and administrative expenses were $167 million, down 5.6%, primarily due to normal salary increments, headcount and other costs.

As of Dec 31, 2016, the company has 92 generic filings (90 abbreviated New Drug Applications (ANDAs) and 2 New Drug Applications) that are pending for the FDA approval. Of these, 59 were Para IV filings and 20 have “first-to-file” status. Further, these 90 ANDAs include 7 ANDAs, acquired from Teva Pharmaceutical Industries Limited (TEVA - Free Report) , of which six are Para IVs.

Our Take

Dr. Reddy’s witnessed year-over-year declines in both the top and the bottom line in third-quarter fiscal 2017. Higher expenses related to product launches, along with reduced remediation costs, would put pressure on profits, 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 Laboratories Ltd Price, Consensus and EPS Surprise

 

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise | Dr. Reddy's Laboratories Ltd Quote

Zacks Rank & Stocks to Consider

Dr Reddy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Sunesis Pharmaceuticals, Inc. and Enzo Biochem, Inc. (ENZ - Free Report) .  Both of them carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Enz Biochem’s loss estimates for 2017 narrowed 5.88% over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 22.50%. Its share price was up 57.6% in the past one year.

Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.

Zacks' Top Investment Ideas for Long-Term Profit

How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>

Published in