NSE Symbol: DRREDDY | BSE Code: 500124
Dr. Reddy's Pharmaceuticals is an Indian multinational pharmaceutical company with presence in more than 80 countries across the world. The company presently offers more than 200 generic versions of expensive medicines at just a fraction of a cost. Its comprehensive portfolio includes capsules, tablets, injectables, and topical creams across the therapeutic areas like pediatrics, dermatology, cardiovascular disease, pain management, gastrointestinal problems, and anti-infection.
Dr. Reddy's Laboratories was launched in the year 1984. Back then, the company was focussed on producing only active pharmaceutical ingredients. Two years later, the company started its operations with emphasis on branded formulations. It launched a couple of brands in India over the next few years and inspired by their success in the domestic markets, and it soon expanded its operations internationally. The late 1990s saw Dr. Reddy's Laboratories enter highly-regulated markets like the United States. This decade also saw the organization commence the production of generics by filing an Abbreviated New Drug Application in the USA. From the last ten years, the company has focussed on improving and strengthening its product offerings and solidifying its position internationally.
Mr. Satish Reddy - Chairman
Mr. Reddy is presently serving as the Chairman of Dr. Reddy's Laboratories. He has been a part of the organization since 1993 when he joined as an Executive Director. Over the years, he moved up in the ranks and held various key positions like Managing Director and Vice-Chairman. He has been instrumental in formulating policies concerning the pharmaceutical sector and the economy. He has served as a member of the Drugs Technical Advisory Board of India and also the President of the Indian Pharmaceutical Alliance. He also oversaw the expansion of the company into international markets like Russia and the Commonwealth of Independent States.
Mr. G V Prasad - Co-Chairman & Chief Executive Officer
Mr. Prasad has played an essential role in transforming the company from a domestic entity into an international pharmaceutical giant. He has been a part of the Board of Directors since the company's early years. During his tenure that spans across almost 30 years, he has improved the revenues of the company from a mere $50 million to more than $2.5 billion. It was under his leadership that the company expanded globally by capitalizing on the opportunities in developed and emerging markets. Mr. Prasad has received several awards for his efforts, the most notable of which is the 'India Business Leader of the Year' by CNBC Asia in 2015.
Mr. Erez Israeli - Chief Operating Officer and Global Head Generics & PSAI Business
Mr. Israeli is among the newest members to join the management team at Dr. Reddy's Laboratories. He joined the company in April 2018 from the Israel based chemicals company Enzymotec, where he served as the President and the Chief Executive Officer. He has more than 25 years of experience, and over his impressive tenure, he has held several key leadership positions. It is worth remarking that before joining Enzymotec, Erez worked with Teva Pharmaceuticals Limited for 23 years during which time, he held several roles like Head of Global Quality, Vice President Asia Operations, President Teva API, President & CEO of Growth Markets, et cetera.
On January 2, 2018, the opening price of Dr. Reddy's Lab shares was Rs.2,427 on the National Stock Exchange. The cost of the BSE SENSEX listed stock moved on to rise over the course of the month to enter the Rs.2,530 territory. However, after that, Dr. Reddy Labs shares moved on to shed roughly 15% and went down to be traded in the levels around Rs.2,100.
On February 2, the opening price of the scrip was Rs.2,150 on NSE. The month of February wasn't a tumultuous one for the investors, but it did show signs that the markets may be in for a bear run. The closing price of the stock at the end of the month was Rs.2,237.25.
The Dr. Reddy's Labs stock price gradually went down over the course of March. The NIFTY 50 stock, which started the month trading at levels around Rs.2,200, moved on to end the month at Rs.2,080. Things didn't change a lot in April either. The stocks maintained their bearings at levels below Rs.2,150.
It wasn't until May that things took a turn, but it didn't bring any reprieve to the investors. In fact, the stock price of Dr. Reddy's continued to go down, and for the second half of the month, the shares changed hands at levels below Rs.2,000. The closing price on May 31, 2018, was Rs.1,936.60. However, the first week of June brought some joy to the investors as the stocks started an upward run. The script managed to enter the Rs.2,100 territory again and lifted the Nifty Pharma index.
The market cap of Dr. Reddy's Lab, as of June 12, 2018, was a little over Rs.36,300 crore.
For the March quarter of the financial year 2017-18, the company's revenue was reported to be at Rs.3,535 crore. In comparison to the last quarter, this figure was down by 7%. Consolidated net profit for the March quarter stated to be at Rs.302.5 crore, in contrast to Rs.312.5 crore in the corresponding quarter of the previous fiscal year.
For the year ended on March 31, 2018, the consolidated revenue posted by the company reported its consolidated income to be at Rs.14,202.8 crore. It resulted in a 1% increase over the previous financial year. The profit after tax for the year was disclosed to be at Rs.981 crore, in contrast to Rs.1,203.9 crore in the prior year. Its research and development allocation for the period decreased by 7% over the FY17 to Rs.1,826 crore.
The performance of Dr. Reddy's Labs in the international markets took a hit in the March quarter. Its global generics revenues for the quarter decreased in North America, Europe, and the emerging markets. However, when we look at these regions over the entire year, Europe and emerging markets registered a growth of 8% while North America reported a decline of 6%.
From the last two years, the shares of Dr. Reddy's Lab have been on a downward path. In January 2016, the shares were trading at levels around Rs.3,000, but by June 2018, the stocks were observed trading at levels around Rs.1,990. This translates into a 30% drop in the stock price.
At the same time, NIFTY Pharma - the country's benchmark stock market index for the pharmaceutical sector, has also been on a downward trajectory. The index has shed more than 2,000 points in the last two years. The pharmaceutical industry has been struggling, primarily owing to processes and quality standards employed by the companies. The US FDA's concerns with these companies is another factor be considered here.
Fundamentally speaking, the company is built on firm foundations and has sound management. However, with the ongoing issues in the pharma sector, it may not be a feasible idea to invest in Dr. Reddy's shares. Alternately, you can look into mutual funds with holdings in the company. Before investing, it is strongly suggested that you do your research.
A lot of research and knowledge is required in stock market investments, and generally, they don't offer any tax benefits. Hence at mymoneykarma, we merely motivate our readers to invest in mutual funds. Investing in mutual funds doesn't require a lot of knowledge, and equity-linked mutual fund schemes also provide tax benefits. In addition to it, since mutual funds contain stocks from multiple companies, they help in building a diversified portfolio.
Note: The contents of this post/blog do not constitute any professional advice on a specific financial matter.