Dr Reddy's Earnings Preview: Revlimid sales may taper, Cidmus integration key

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Dr Reddy's Laboratories may report revenue growth in the range of 7-15 percent for the December quarter, according to a CNBC-TV18 poll. The drugmaker will report results on Wednesday, January 25.

The company's margin is likely to remain flat year-on-year, while net profit may grow in the high teens.

Revenue growth for Dr Reddy's during the December quarter is likely to be supported by the US market. Sales in the company's core market is likely to be between $269 million to $280 million. Although the number is higher than the $248 million last year, it may be lower than the $344 million it reported in the September quarter.

Dr Reddy's US business will be aided by the volume-led sales of its cancer drug Revlimid generic. Sales of Revlimid generic are also likely to grow year-on-year, but may taper off sequentially as most of them could have been pushed out in the September quarter.

Analysts say that Revlimid may have reported sales between $100 million to $120 million in the September quarter, compared to a $40 million estimate. The company is said to hold a 18 percent share in Revlimid generic.

EBITDA margin for the period is likely to remain flat year-on-year but is likely to be supported by lower raw material prices and stronger US sales.

Excluding the Revlimid generic, the company's base business will continue to see pricing pressure.

Dr Reddy's India business, which was flat during the September quarter is likely to grow 6-7 percent from the same period last year.

A key thing to watch during the quarter would be the integration of the cardiac drug Cidmus brand in the India business. Cidmus was purchased from Novartis in April last year for a sum of Rs 463 crore.

Management commentary on the sales of revlimid generic, pricing pressure in the US, subpoenas and guidance would be awaited. Drug-wise, new launches like generics of Nexavar, Doxorubicin Liposome (cancer) Ciprodex generic (antibiotic) will also aid growth.

Shares of Dr Reddy's Laboratories have declined 3.5 percent over the last 12 months.