Dr Reddy’s Laboratories (RDY) reported fourth quarter earnings per American Depository Share (ADS) of 20 cents compared to a loss of $1.30 in the year-ago period. For the FY 2010, earnings per ADS came in at 10 cents compared to a loss of 70 cents in the previous year. The company reported quarterly and annual revenues of $365 million (down 17%) and $1,563 million (up 1%), respectively.

Revenues for FY 2010 grew 9% excluding the contribution from sumatriptan in the previous year. Earlier, in November 2008, Dr Reddy’s launched the authorized generic version of GlaxoSmithKline’s (GSK) Imitrex (sumatriptan succinate) tablets in the US. Dr Reddy’s being the first company to launch the authorized generic version of the drug, which enjoyed exclusivity till August 2009 after which other players entered the market.

Following the expiry of this period, the company’s top-line and margin both suffered. The two segments of Dr Reddy’s – Global Generics and Pharmaceutical Services & Active Ingredients (PSAI) recorded annual revenues of $1,081 million and $454 million, respectively. While revenues from the former declined 2%, PSAI recorded a growth of 9% compared to the previous year.

Generics revenues from North America (down 15%), Europe (down 19%), Russia & other CIS markets (up 20%) and India (up 20%) were $374 million, $215 million, $203 million and $226 million, respectively. Although the North American Generics market, accounting for 35% of total Global Generics declined, excluding the impact of sumatriptan revenues of the previous year, the growth would have been 13%.

The European market recorded the highest decline among all the regions. While revenues derived from Germany declined 26% to $162 million, revenues from the rest of Europe increased 17% to $52 million.

Gross profit margin during the year came down to 52% compared to 53% in FY09. The decline was primarily on account of a favorable mix of high margin revenues from sumatriptan in the previous year.

Dr Reddy’s is targeting the huge potential in the US generics market in the next 2-3 years as drugs with sales of about $75 billion are slated to lose their patents.

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