Dr Reddy's posts loss of Rs 569.7 crore in Q3FY20 on impairment of generic Nuvaring drug

Dr Reddy's Laboratories on Monday posted a loss of Rs 569.7 crore in the third quarter of fiscal 2020 due to impairment of non-current assets including generic Nuvaring drug.

The company had reported a net profit of Rs 485.2 crore in the year-ago quarter and Rs 1,092.5 crore in the July-September quarter.

Total revenue during the quarter grew 13.86 percent to Rs 4,383.8 crore from Rs 3,850 crore YoY.

The company’s global generics business in Q3FY20 grew 15 percent to Rs 3,592.7 crore, YoY, driven by Europe business (up 52 percent), North America business (up 8 percent), India (up 13 percent) and Emerging Markets (up 19 percent).

Pharmaceutical services and active ingredients (PSAI) segment increased 16 percent YoY during the quarter while revenue from proprietary products & others declined 18 percent YoY to Rs 100.5 crore.

The company took a total impairment charge of Rs 1,320 crore in the quarter ended December 2019, of which Rs 1,113.7 crore was towards impairment of gNuvaring and the balance of Rs 206.3 crore was towards other product related intangibles.

Dr Reddy's Labs said in December 2019, there has been a generic launch and an authorized generic launch for the product Nuvaring, which has led to a considerable erosion in the value of this product, and accordingly, it has taken an impairment charge of Rs 1,113.7 crore.

“The current quarter performance has been good across all our businesses and we achieved strong EBITDA margins. The profits were impacted due to trigger based impairment charge taken on a few products including gNuvaring. We continue to focus on execution and have made significant progress on quality systems and operational efficiencies,” said GV Prasad, co-chairman and MD, Dr Reddy’s Laboratories.

In Q3FY20, the company’s EBITDA increased by 24.1 percent to Rs 1,073.7 crore from Rs 865.2 crore while EBITDA margin rose 200 bps to 24.5 percent YoY.

The operating performance beat CNBC-TV18 poll estimates of Rs 914 crore and 21.9 percent for the quarter respectively.

At 1:25 pm, the stock surged 4.91 percent to Rs 3,176.60 on the BSE. The stock touched a 52-week high of Rs 3,179.35 intraday.