MUMBAI (NewsRise) -- Dr. Reddy's Laboratories reported a seven-fold jump in first-quarter net profit, beating estimates, as the Indian drug maker gained from the launch of a generic version of de-addiction drug Suboxone.
Consolidated net income for the quarter ended in June stood at 4.76 billion rupees ($69 million), compared with 666 million rupees a year earlier, the company said in a statement. Analysts were expecting a net profit of 2.98 billion rupees, according to a Reuters poll.
Revenue grew 12% to 37.21 billion rupees. Sales in North America rose 6% aided by contribution from new products, primarily Suboxone, and partly offset by competitive pressures on some of the key molecules, Dr. Reddy's Co-chairman and Chief Executive G.V. Prasad said in the statement.
In June, Dr. Reddy's launched the generic version of the U.K.-based Indivior's opioid treatment Suboxone film in the U.S. after getting the regulatory approval.
However, earlier this month, Dr. Reddy's faced a setback when a U.S. court temporarily blocked it from selling the drug that is expected to add $100 million in sales this fiscal year, and account for more than 10% of Dr. Reddy's profit. A delay in monetizing Suboxone is likely to lower its value significantly as more competitors such as Mylan and Teva Pharmaceutical Industries are gearing for its launch.
The company sold the drug in the U.S. for two or three days, Saumen Chakraborty, chief financial officer and president of Dr. Reddy's, said in a news conference. He added that the company remains under the shadow of perennial pricing pressure in the U.S., the largest drug market in the world, and plans to launch 15-20 new drugs there this fiscal year.
Indian pharmaceutical companies have been grappling with falling drug prices in the U.S., where the Food and Drug Administration has expedited its approval rate for generics, paving the way for increased competition. A rising number of retail pharmacies in the U.S. are joining hands to gain leverage in buying generic drugs in bulk, pushing prices down further.
Meanwhile, the drug maker continues to grapple with regulatory challenges at its plants that have been under FDA scrutiny over the past three years.
In 2015, the U.S. drug regulator issued a warning letter to three of the company's plants, citing quality issues and violations of good manufacturing practices. Until Dr. Reddy's fixes the problems, it won't receive U.S. approvals for drugs made at these plants, which account for 10%-12% of its sales.
The company has been transferring the production of several critical products out of the affected plants. It is awaiting FDA inspection at one of the plants in Duvvada, from where a large pipeline of generic drugs is set to be launched, Chakraborty said.
Shares of Dr. Reddy's rose 2.2% on Thursday in Mumbai trading, while the benchmark S&P BSE Sensex gained 0.3%.
--Dhanya Ann Thoppil