Dr Reddy's posts strong Q4 net of Rs 3.25 billlion
Indian drug maker Dr Reddy's Laboratories Ltd posted strong quarterly profit, well above forecasts, on sales of generics such as a cheap rival to GlaxoSmithKline Plc's anti-nausea blockbuster, Zofran.
The Hyderabad-based firm, which received a setback earlier this month when a US court upheld a patent protecting Japanese firm Eisai Co Ltd's Aciphex drug, posted January-March net profit of Rs 3.25 billion ($79.5 million) versus a loss of Rs 236 million reported a year ago.
A Reuters poll of 11 brokers had forecast quarterly net profit of Rs1.76 billion.
Full-year profit jumped to Rs 9.33 billion from Rs 1.6 billion in the previous year.
Dr Reddy's India's only New York Stock Exchange-listed drug maker, had forecast good growth in January when it announced its October-December net profit had trebled.
Last month, Ranbaxy Laboratories India's top drug-maker by sales, reported an above-forecast 79 per cent rise in net profit and raised its 2007 sales forecast, but Cipla Ltd's profit fell 34 per cent, lagging forecasts.
Analysts say Dr Reddy's, which last year acquired Germany's Betapharm, gained from sales of Ondansetron hydrochloride tablets, a generic equivalent of GlaxoSmithKline's Zofran, used to prevent nausea and vomiting associated with cancer treatment.
Sales of generics - cheaper versions of drugs that have gone off patent -- in Western markets are expected to sustain earnings growth for India's top drug makers.
In April, the world's largest drug maker, Pfizer Inc cut its 2007 forecast as generic competition hit demand for its Norvasc hypertension drug.
Shares in Dr Reddy's fell more than 10 percent in January-March, underperforming a 3.8 per cent drop on Mumbai's healthcare sub-index. Ranbaxy also fell 10 percent, while Cipla lost 6 percent.
Dr Reddy's trades at around 14 times forecast earnings, against multiples of 21 for Cipla and nearly 24 for Ranbaxy.
Shares in Dr Reddy's closed 1.8 per cent lower at Rs 665.75 in a flat Mumbai market.