India's Divi's Labs Q1 profit slumps on drug pricing pressures

Laurus Labs

14/08/2023 09:28

HYDERABAD, Aug 14 (Reuters) - Indian pharmaceutical
company Divi's Laboratories  DIVI.NS  reported a 49.2% fall in
quarterly profit, missing analysts' estimates, as the generic
drug maker grappled with pricing pressures in key markets like
the United States.
    The company reported a consolidated profit of 3.56 billion
rupees ($42.9 million) for the first quarter ended June 30,
compared to 7.02 billion rupees a year ago. 
    Analysts, on an average, had expected a profit of 4.17
billion rupees, according to Refinitiv data.
    Revenue from operations fell 21.2% to 17.78 billion rupees.
    The Hyderabad-based company's core business is manufacturing
of active pharmaceutical ingredients (API), which are chemical
compounds in a drug that help produce desired health effects. 
    Divi's Labs is also involved in the contract manufacturing
of APIs and intermediates for global companies. Exports to the
U.S. and Europe contribute to over 60% of revenue. 
    In May, the company said there were pricing pressures in
some generic APIs, with some firms after the pandemic struggling
to get rid of huge stocks of dosages of generic drugs before
their expiry date. This, in turn, hurt prices and demand for
generic APIs. 
        Divi's Labs said it expects prices to stabilize in the
coming quarters. 
  
    The company also saw a 6.41% rise in costs of materials
consumed during the quarter, it said.
    Shares of Divi's Labs were trading 0.84% lower at 3,648.25
rupees on Monday after its results, compared to a 0.44% fall in
the Nifty pharma index  .NIPHARM . 
    Smaller rival Laurus Labs  LAUL.NS  last month reported a
fall in quarterly profit and revenue, citing reasons including
demand softness in its API business. The company's core profit
margins sank to a 19-quarter low. 
     
       


($1 = 82.9470 Indian rupees)

 (Reporting by Rishika Sadam; Editing by Sonia Cheema)
 ((Rishika.S@thomsonreuters.com;))