Dr Reddy's Aims To Consistently Deliver Double-Digit Sales Growth, Ebitda Margin Of 25%

Dr Reddy's Laboratories Ltd. sees its overall sales growing in double-digits and is working towards delivering both Ebitda and return-on-capital of 25% on a consistent basis, according to Chief Executive Officer of Branded Markets India and Emerging Markets, MV Ramana.

The pharma company reported a 9% year-on-year decline in net profit to Rs 1,341.90 crore in the quarter ended September 2024, according to an exchange filing. That compares with Bloomberg's estimate of Rs 1,427 crore.

Ebitda margin came in at 25.8%, missing Bloomberg's expectations of 28%, and revenue was up 16.5% at Rs 8,038.2 crore, higher than Rs 7,717 crore expected.

"We are in a pretty healthy space as far as the margins are concerned," Ramana told NDTV Profit's Sajeet Manghat in a post-earnings interview. "We would be able to work towards delivering an Ebitda of about 25% and an ROC of 25% on a consistent basis."

He stated that overall sales are expected to grow in double digits, with branded business in India and emerging markets growing in higher double digits and US business growing in high single digits.

Ramana believes that the India business should aim for double-digit growth. "In the last two years, we have been working to add on innovation to the India business in our aspiration to grow the ranks from 10 where we are in to the top five," he said.

The three levers for this growth that the company has put in place are innovative assets, consumer health, and digital therapeutics.

The base portfolio of Sanofi, whose business Dr Reddy's acquired in March, has grown in double digits, Ramana said calling the portfolio a good set of products. "Once we got this portfolio from Sanofi, we have been able to add growth both in terms of how we would be able to take it to a larger set of customers and how we are able to bring it into tier two and tier three cities as well," he said adding that the portfolio has grown well both in quarter one and quarter two and is contributing meaningfully to the overall growth.

For its joint venture with Nestle Health Sciences, Ramana said going forward we look forward to bringing some of global innovation and global brands that Nestle Health Sciences has outside of India for the benefit of the Indian patients.

The Nestle JV launched has launched about three products this quarter and the company has a good number of products in the pipeline.

"There are several players over there but there is no one with a predominant market share given the strength of the Nestle Health Sciences and Dr Reddy's ability to take the products and take the help of healthcare professionals to support the relevance of these portfolio to various disease areas," he said.

Ramana has guided for 20 product launches in the US and at the same time he said the company has a large number of new products to be launched in India and emerging markets.

Price erosion in the US impacts a few products, now whether that impact comes in one quarter or the other we would not be able to say, Ramana said and added that in quarter two price decline has been in single digit.

"Revlimid continues to be meaningful for Dr Reddy's when it comes to the base portfolio," he said while noting there's also been good growth. The growth was largely based on volumes.

"Our aspiration is to grow the base portfolio in single digits that is something that we continue to do and we continue to look for any inorganic opportunities that might come our way to further supplement our portfolio in the US," Ramana said.