Dr. Reddy's (RDY) Earnings & Revenues Decline Y/Y In Q4

Dr. Reddy's Laboratories Ltd. (NYSE:RDY) reported fourth-quarter fiscal 2017 earnings per American Depositary Share (ADS) of 29 cents, down from 7 cents in the year-ago quarter.

Revenues declined 5.4% year over year to $548 million.

Dr. Reddy’s share price was down 10.9% year to date, while the Zacks classified Medical Generic Drugs industry lost 3.9%.

Quarter in Detail

Dr. Reddy’s reported revenues under three segments – Global Generics, Pharmaceutical Services & Active Ingredients (PSAI), and Proprietary Products and Others.

Global Generics revenues fell 5% year over year to $449 million during the fourth quarter.

PSAI revenues were $83 million in line with the year ago quarter.

Revenues at the Proprietary Products and Others segment came in at $15 million, down 2% from the year-ago quarter.

Furthermore, research and development expenses were down 6% year over year to $71 million.

Also, selling, general and administrative expenses were $169 million, down 6%.

During the year, the company has 101 generic filings (99 abbreviated New Drug Applications (ANDAs) and 2 new drug applications) that are pending for the FDA approval. Of these 99 ANDAs, 62 were Para IV filings and 20 have “first-to-file” status.

2017 Updates

For fiscal 2017, the company reported diluted earnings per American Depositary Share (ADS) of $1.11 compared with $1.80 per ADS in the year ago quarter.

Revenues for fiscal 2017 came in at $2,171, down 9% year over year.
Global Generics revenues were down 10% to $1,780 million due to lower contribution from North America and Emerging Markets.

Revenues from PSAI came in at $328 million down 5% from the year ago quarter.

Revenues at the Proprietary Products and Others segment came in at $64 million, down 3% from the year-ago quarter.

Our Take

Dr. Reddy’s witnessed year-over-year declines in both the top and the bottom line in fourth-quarter fiscal 2017. Higher expenses related to product launches, along with reduced remediation costs, would put pressure on profits, going forward.

Nevertheless, we remain positive on the company’s efforts to expand its biosimilar portfolio, particularly in the emerging markets over the next few years.

Zacks Rank & Stocks to Consider

Dr. Reddy’s currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include VIVUS, Inc. (NASDAQ:VVUS) , Galena Biopharma, Inc. (NASDAQ:GALE) and Aeglea BioTherapeutics (NASDAQ:AGLE) . While VIVUS sports a Zacks Rank #1 (Strong Buy), Galena and Aeglea carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’ loss per share estimates narrowed from 502 cents to 39 cents for 2017 over the last 60 days. The company posted positive earnings surprises in all of the four trailing quarters, with an average beat of 233.69%.

Galena’s loss per share estimates narrowed from $2.03 to 58 cents for 2017 over the last 60 days. The company posted positive earnings surprises in three of the four trailing quarters, with an average beat of 72.77%.

Aeglea’s loss per share estimates narrowed from $3.64 to $2.48 for 2017 over the last 60 days. The company posted positive earnings surprises in three of the four trailing quarters, with an average beat of 20.75%.

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