Dr Reddy’s revenues grew 8% YoY to Rs 5,338.3 crore driven by 45.6% YoY growth in RoW market to Rs 440 crore and 7.6% growth in Russia & CIS markets to Rs 710 crore. US revenues grew 7.2% YoY to Rs 1864.5 crore on back of new launches and increase in base business volume. India business grew 7% YoY to Rs 1026.6 crore driven by price hike in existing products and new launches while Europe revenues declined 2.1% YoY to Rs 405.8 crore amid price erosion in some products being partially offset by new launches. PSAI segment posted growth of 3.7% YoY to Rs 727.1 crore. Gross margins were flat YoY due to favourable product mix and reduction in procurement cost for certain products being offset by price erosion in base business. EBITDA margins improved 1186 bps to 22.8% due to lower employee and other expenses. Subsequently, EBITDA grew 125.4% YoY to Rs 1215.7 crore. [Note: base of Q3FY21 had Rs 597.2 crore impairment cost].

Dr Reddy’s Laboratories’ Q3 revenues and margins were in line with I-direct estimates, primarily driven by new launches and higher sales volume being partially offset by price erosion in base business. The management remains committed to working on cost rationalisation, especially on the SGN&A front and calibrating of R&D spend more towards Global Generics front & Biosimilars and lower towards proprietary products. Key growth drivers in the near term would be key launches across geographies besides continuing growth momentum in Global Generics in India and Russia.

Q3FY22 Earnings Conference Call highlights 

North America: Driven by new launches and increase in volume of base business, which was partially offset by price erosion in some molecules.

Launched four new products: Carmustine Injection, Ephedrine Sulphate Injection, Valsartan Tablets and Venlafaxine ER tablets o Filed one new ANDAs.

India: Driven by increase in sales volumes of existing products and contribution from new product launches amid loss of Covid sales.

Russia growth was on account of increase in prices in existing products and new products launches along with a favourable forex rate.

RoW growth traction due to new launches and higher sales volume in the base business.

PSAI business: Filed two DMFs in US. Guided for sequential growth, going forward.

Gross margins improved sequentially due to favourable product mix.

Company is in talks with government to register Sputnik as a booster dose and indicated for export opportunity for Sputnik which is still not exploited.

R&D expense at Rs 416 crores (7.8% of sales)

SG&A expenses at Rs 1541 crore (up 7% YoY) primarily due to investment in sales and marketing for key brands and annual increments.