Dr Reddy’s rallies about 1.3% with the acquisition of products from Eton Pharma

The company acquires an injectable product portfolio to strengthen the institutional business.  

Dr Reddy’s Laboratories Ltd, one of the leading pharmaceuticals companies in India, has been trending on Dalal Street as it has rallied by about 1.3% from its previous close of Rs 4,308.75. The scrip opened at Rs 4,400 which was also its day’s high (+2.1%). At 10:40 am on 27 June, the stock was trading at Rs 4,360.95 on the BSE.

The upside was witnessed on the back of the company acquiring a portfolio of branded and generic injectable products from Eton Pharmaceuticals, USA. The acquisition will complement Dr Reddy's US institutional business with limited competition injectable products. According to the company’s regulatory filing, Dr Reddy's has acquired the Eton portfolio for an upfront payment of approximately $5 million (Rs 39 crore) in cash, plus contingent payments of up to $45 million (Rs 351 crore). The acquisition supports Dr Reddy's efforts to accelerate and expand affordable medications for patients. The value of the total addressable market for these products in the US is approximately $174 million (Rs 1,358 crore) for the calendar year ending in April 2022 according to IQVIA.

Talking about its recent quarterly results, in Q4FY22, revenue grew by 9.98% YoY to Rs 5068.4 crore from Rs 4608.3 crore in Q4FY21. On a sequential basis, the top-line was down by 0.68%. PBIDT excluding other income was reported at Rs 451 crore, down by 57.18% YoY and the corresponding margin was reported at 8.24%, contracting by 1385 basis points YoY. PAT was reported at Rs 86.5 crore, down by 83.96% from Rs 539.4 crore in the same quarter of the previous fiscal year. The PAT margin stood at 1.58% in Q4FY22 contracting from 11.31% in Q4FY21.

Dr Reddy's Laboratories has been catering to the needs of the pharmaceutical sector for over two decades. Active Pharmaceutical Ingredients (API) are their core strength, having a wide range of portfolios. The company also manufactures generic medicines with businesses spread across India, Russia, US and Germany.

The stock has a 52-week high of Rs 5,613.65 and a 52-week low of Rs 3,655.00.