(Photo for representational purpose only)
The stock price of Hyderabad-based NYSE-listed Indian pharma major Dr Reddy's Laboratories touched its 52-week high of Rs 2,545 on Thursday.
Interestingly, despite the company posting a good set of numbers for the second quarter and for the first half of FY14, the stock price slipped after the announcement and closed at Rs 2455.95, down 2.64 per cent on the Bombay Stock Exchange.
Its consolidated net profit
increased 76 per cent to Rs 690 crore in the second quarter ended September 30, 2013, compared to Rs 392 crore in the corresponding quarter of the previous financial year.
Dr Reddy's total revenue for the quarter was Rs 3,357 crore (as against Rs 2,880 crore in the corresponding quarter of the previous year), posting a 17 per cent growth.
This growth was largely driven by growth in the US business,
Russia and emerging markets. Sales in US was higher because of its limited competition products - products where there were few competitors. For instance, when it comes to decitabine and donepezil, it considers itself the sole generic player.
Gross margins for global generics was at 66.1 per cent. According to company officials, this was primarily on account of higher contribution from new product launches in North America. During the quarter, the company launched 19 products.
Analysts though optimistic, feel sustaining this growth might be a challenge for the company.
Company officials do accept this challenging task going forward, particularly in retaining gross margins for global generics at current levels. But they also expect to find improvement in the company's pharmaceutical services and active ingredients (PSAI) business, which has seen de-growth. They hope investment in R&D may help improve performance over time. Currently, research and development expenses account for 9 per cent of total revenues.