HYDERABAD, May 12 (Reuters) – Indian drugmaker Dr Reddy’s reported an 86% slump in quarterly profit on Tuesday, hurt by an impairment charge linked to its discontinued cancer therapy program.
Consolidated net profit dropped to 2.21 billion rupees ($23.1 million) in the quarter ended March 31, from 15.93 billion rupees year earlier.
The results mark the company’s second consecutive quarterly decline in profit.
During the quarter, Dr Reddy’s said it had decided to discontinue some R&D programs related to its Chimeric Antigen Receptor T-cell (CAR-T) therapy portfolio following clinical trial outcomes.
CAR-T therapy is a form of cancer treatment.
Following the decision, the company recognized a net loss of 1.35 billion rupees in its global generics segment, it said in a statement.
Dr Reddy’s also recorded an additional impairment charge of 914 million rupees after discontinuing a late-stage lung cancer study.
Total revenue from operations fell 11.5% to 75.46 billion rupees, below analysts’ estimate of 82.46 billion rupees, hit by pricing pressure and increasing competition in its key U.S. market.
Sales were also hurt by slowing demand for lenalidomide, a generic version of Bristol-Myers Squibb’s cancer drug Revlimid, which has been a strong growth driver for Dr Reddy’s over the last few years. Competition has intensified following lenalidomide’s patent expiry, which has hurt sales.
Reddy’s is banking on its generic semaglutide products as a key future growth driver. In March, the company launched its semaglutide drug Obeda in India, and is eyeing launches in Canada, Brazil and other markets after patents expire.
($1 = 95.6275 Indian rupees)
(Reporting by Rishika Sadam; Editing by Sonia Cheema)
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