Dr. Reddy’s Laboratories (NSE: DRREDDY) is an Indian multinational pharmaceutical company. Founded in 1984, the company primarily develops and sells a wide range of generic and over-the-counter drugs, as well as active pharmaceutical ingredients, and biopharmaceuticals. The company has operations in over 100 countries, with a focus on the developing world. It is known for its wide range of products in various therapeutic areas like oncology, neurology, and nephrology, Dr Reddy’s also has a presence in the biosimilars space, in addition to a focus on complex generics and differentiated products. The company also has its own R&D division that is focused on developing new drugs and expanding its product portfolio.
Dr. Reddy’s Laboratories has reported its financial results for the quarter ended December 31st, 2022. The company’s gross profit margin for the quarter was at 59.2%, which represents an increase of ~545 basis points over the previous year. This increase was driven mainly by new product launches with higher margins, a favorable product mix, and favorable foreign exchange movement, which was partly offset by price erosion. The company’s gross profit margin for the Generic and PSAI business segments were 64.6% and 18.2% respectively.
SG&A expenses for the quarter were at Rs 18 billion, an increase of 17% YoY. This increase was primarily due to investments in sales & marketing, annual increments, certain one-off expenses, and higher foreign exchange rate. Sequentially, SG&A expenses increased by 9% mainly due to an increase in sales & marketing expenses and other one-off expenses.
R&D expenses for the quarter were at Rs 4.8 billion and represented 7.1% of revenues. The company has continued to focus on investing in R&D to build a healthy pipeline of new products across its markets, including the development of products in its biosimilars and generics businesses.
The company also reported an impairment charge of Rs 134 million compared to Rs 47 million in the same period last year. Other operating expenses were at Rs 732 million compared to income of Rs 240 million in Q3FY22. The net finance expense for the quarter was at Rs 139 million compared to income of Rs 289 million in Q3FY22.
The profit before tax for the quarter was Rs 16.3 billion, which is 24.1% of revenues. This represents a YoY increase of 68% and a sequential increase of 1%. The profit after tax for the quarter was Rs 12.5 billion and the effective tax rate was 23.7%. The company’s diluted earnings per share was at Rs 74.95. The company’s EBITDA for the quarter was at Rs 19.7 billion and the EBITDA margin was 29.0%.
The company also reported capital expenditure of Rs 2.9 billion, free cash flow of Rs 19.8 billion, and a net cash surplus of Rs 34 billion as of December 31st, 2022. The company’s return on capital employed (RoCE) for the quarter was 35.8% (annualized).