Launches, base biz expansion tonic for Dr Reddy's double-digit growth

After robust fourth-quarter results, near-term launches and cost-control efforts would be key

- RAM PRASAD SAHU

A strong launch pipeline for 2022-23 (FY23), market share gains, and cost-control efforts are expected to drive strong revenue and earnings growth over the next two years for the country's fourth-largest pharmaceutical (pharma) company by market capitalisation (m-cap), Dr. Reddy's Laboratories.

While the company's bottom line grew 10.5 per cent annually over the 2016-17 through 2021-22 (FY22) period, it is expected to register thrice that growth rate over the next two years, observes ICICI Securities.

The January-March quarter (fourth quarter, or Q4) performance in FY22 and growth in the current financial year (FY23) are the near-term triggers. Double-digit price erosion notwithstanding, the company's US business registered 7 per cent growth on a sequential basis to $265 million, beating analyst estimates.

The US is the largest geography for the company and accounted for 37 per cent of consolidated sales in Q4FY22. The performance of its peers (barring Cipla at 7 per cent quarter-on-quarter, or QoQ, growth to $161 million) in the US market was weaker.

Lupin reported 10.4 per cent decline sequentially to $181 million, on the back of product recalls and price erosion.

Zydus Lifesciences (formerly Cadila Healthcare), too, reported a decline (minus 5 per cent) on a sequential basis to $189 million due to competitive pricing.