On Thrusday, July 27th, financial results for the first quarter of the new financial year from Dr Reddy's and Glenmark surprised many analysts. While both took a hit, like many others in the industry, from the adjustments following the imposition of GST (Goods and Services Tax), the other factors such as price erosion in the US and higher costs, brought down the numbers of Dr Reddy's.
Glenmark, on the other hand, despite the setbacks, posted better than expected set of numbers, some of the analysts Business Today spoke to, said. Analysts particularly point to declining margins for Dr Reddy's, among with the increase in its operating costs quarter on quarter. Its gross profit margin at 51.6 per cent meant a decline by approximately 460 bps over last year.
The media release put out by the company quoted even G V Prasad, Co-Chairman and CEO of the company as saying: "Our first quarter's results of FY 18 have been below expectations. While headwinds in the form of price erosion due to U.S. customer consolidation continue, a lower contribution from new product launches in the U.S. and the GST implementation in India also impacted our performance."
In contrast this, Glenmark posted a consolidated revenue increase of 19.99 per cent to Rs. 2,363 crore . What is more, its India Business grew by 15.21 per cent to Rs. 616.40 crore.
According to a company official, had it not been for the GST implementation, this growth could have been even higher. But the results of Glenmark's this quarter need to be looked along with its rather difficult forth quarter of the previous year, when its consolidated revenue increased by just 6.52 per cent as compared to the corresponding previous quarter.
On the bourses, Dr Reddy's shares on the Bombay Stock Exchange opened the day at Rs 2719.80, touched a low of Rs 2596 to close the day at Rs 2651.45, down 3.29 per cent. Glenmark, opened at Rs 710 on the BSE closed the day at Rs 715.75, up 1.28 per cent.
Also the latest Glenmark results were aided by its significant generic cholesterol-lowering product launch in the US.