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Coronavirus impact: Overall performance projected to be 'quite volatile' in FY21, says Dr Reddy's

PTI     July 6, 2020

Dr Reddy's Laboratories expects its overall performance to be "quite volatile" in the current fiscal with uncertainties related to COVID-19 set to increase during the period, the company said in its Annual Report for 2019-20. Sharing information with the company's shareholders, the drug major said overall, there was no major impact of the pandemic during the last fiscal, including the fourth quarter.

"Having said so, we believe FY2021 will have more uncertainties than ever before. Consequently, our overall performance may be quite volatile," Dr Reddy's Laboratories said. The company however remains cautiously optimistic of re-calibrating its levers to suit the new business environment, it noted.

"If we do this successfully, we should be able to come to terms with the new COVID-19 reality. And, if that occurs, we should perform satisfactorily in FY2021," it added. Elaborating on the impact of COVID-19 on the company's business performance last fiscal, Dr Reddy's said it saw some incremental sales in certain markets, such as the US, Europe and Russia, due to an increase in panic.

The company's sales, however, got impacted in domestic market and emerging markets like Russia and Brazil due to the pandemic, Dr Reddy's said. The Hyderabad-based firm said it aims to continue with initiatives like cost control and increased efficiencies this fiscal amid challenges like coronavirus pandemic.

"We expect this journey to continue with increased rigor in FY2021, and thus provide the necessary impetus to our performance next year," Dr Reddy's said. The drug firm will continue to focus on patient-centric product innovation, operational excellence, continuous improvement and attaining leadership in chosen spaces, it added.

Commenting on the outlook for North American Generics (NAG) business, the company said its current priority includes accelerating new product launches and increasing the market share of existing products. The strategy is to significantly expand portfolio and ensure the right cost structures for products to be able to compete in this highly competitive market, the drug firm noted.

"We will continue to focus on complex formulations" primarily injectables and oral solid dosage forms" as well as OTC brands in the medium term, and generics, controlled substances under class II, and non-substitutable generics in the longer term," it said. The company's NAG business accounted for 37 per cent of the company's overall revenues, which stood at Rs 17,460 crore last fiscal.

In 2019-20, the drug firm said it filed eight new abbreviated new drug applications (ANDAs) with the USFDA. As on March 31, 2020, the company had 99 generic filings pending approval from the US health regulator. The company's strategy for the emerging markets is to build a healthy portfolio pipeline, including expansion of biosimilars and oncology products.

"We will focus on scaling up in our major markets, which include Russia, China, Brazil, South Africa and Ukraine," Dr Reddy's said. In India, in the near term, the company will continue to drive productivity improvement and focus on its core therapeutic areas and big brands.

"In the medium to long-term, our strategy is to build a healthy pipeline of differentiated products in relevant therapies including biosimilars, and expand our presence in new areas such as nutraceuticals," it added.

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