After a good third quarter, Dr Reddy’s Laboratories may have a weak fourth quarter this fiscal owing to a delay in launch of various products which were initially slated to be in markets by the second half of FY17, says Saumen Chakraborty, CFO of the company.
He is however confident of getting back on to the growth path starting FY18 on the back of more than 15 significant launches and approvals that will help the pharma major make a comeback.
“Even one significant launch in North America may make a huge difference,” he says.
The pharma major reported third quarter earnings of the current fiscal on saturday. While revenues declined, the drop was in-line with expectations and was overall an operationally strong quarter for the drug firm.
Below is the verbatim transcript of Saumen Chakraborty’s interview to Nigel D’Souza, Reema Tendulkar, and Ekta Batra on CNBC-TV18.
Reema: First if you could give some colour on Q4; in your concall you had spoken about softness in Q4 due to delay in Gleevec generic. Will it be a quarter-on-quarter decline in revenues in Q4 and will a muted topline also impact your margins if you could just throw some financial colour on what Q4 is likely to be?
A: I will just put it in perspective that in Q1 when there was a huge drop in North America sales compared to Q4 of last year, there were multiple factors. One was the base business itself has come down at an earlier say USD 90 million per month kind of a run rate to a USD 75 million per month run rate and that too there was another part of the revenue that used to generate out of Shreveport plant with our McNeil business. The contract was to end in Q1. So, there was quite a bit of drop which happened.
We feel that as and when we are getting a new product approval and launches, things will improve and we are quite hopeful of some significant launch in the second half which now we find that those launches are getting pushed to FY18. Also, we didn\\’t get any verdict so far on Aloxi. So, in Q4 when we said in concall that we expect some softness in Q4, we are not factoring in any kind of things from Aloxi. However, for example, Gleevec was reasonably more assured kind of launch and which we had earlier from our own plant because of warning letter we did mitigation, shifted to a partner’s site but even in the partner’s site also there have been US FDA audits and 483 observations put some kind of doubt in terms of the 20 of approvals and launch in Q4.
So, factoring in all these things in North America, due to a lower base and in absence of any significant launch we find there are problems and it is getting compounded by another mid-sized molecule that is there in our current portfolio where there is a temporary supply disruption. We hope that will get over in one or two months. All these factors are there in our mind to say that Q4 is soft which eventually in Q1 of FY18 we hope to recover and then from thereafter we hope to grow.
Ekta: I just want to follow up on one particular thing that was mentioned in the conference call which we didn’t have a chance to talk about. Gleevec generic you said was actually delayed because there was a partner that received 483’s as well. Can you confirm to us if incase that partner is Hetero?
A: No, I cannot confirm which partner and all. Those are confidential information but as I just said, we did some risk mitigation; unfortunately we feel at the moment the way we are, it could get pushed out a bit.
Ekta: Would be assured for FY18 in terms of a launch?
A: Nothing in North America can be said with 100 percent kind of a certainty. However, yes, there is a very high probability of these getting launched in FY18.