Suboxone verdict will be the most important trigger for US market: Saumen Chakraborty, Dr Reddy’s

While we have been able to retain the market share, on the pricing front, there has been quite a bit of a drop and that has led to quarter-on-quarter decline, Saumen Chakraborty, President, Chief Financial Officer and Global Head of IT & Business Process Excellence, Dr Reddy's Laboratories, tells ET Now.

Edited excerpts:

What went wrong in the US business? Did absence of Suboxone sales lead to the decline?

Yes, Suboxone is one which was there in the previous quarter and not there in Q2 but also there are a couple of molecules where there is increased competition and lower price. While we have been able to retain the market share, on the pricing front, there has been quite a bit of a drop which includes molecules like Decitabine or even metoprolol. That had impact where it has resulted in a quarter-on-quarter decline.

Do you expect similar sales in the US or do you have some new launches in the coming quarters which can reset the number?


Already in October, we have announced four launches. More launches are lined up for the year but a significant increase happens only when there is a significant product launch. The Suboxone verdict is awaited and it will be the most important trigger for the US market.

What do you expect in terms of approval? Could you update us on the approval guideline for Copaxone and Nuvaring?

Nuvaring approval will be in the first half of 2019. From our side we have given everything. Now, the US FDA has to approve. So far as Copaxone is concerned, we have given both the DMA and ANDA. We have submitted our comprehensive response. We will have to wait. Further query can be expected. We have to wait for some more time for Copaxone. Suboxone. We will know when the verdict comes. The hearing happened on October 4th and normally there is a 90-days guideline for the court verdict. That means some time from now onwards, till 4th of January we can expect a preliminary verdict to come on Suboxone.

Emerging markets have seen a sharp uptick in sales. Were there some new launches which helped emerging market numbers for the quarter gone by?

We have launched in Russia and it is doing well. There have been good traction in some of the markets beyond Russia, in China and Ukraine. On a year-on-year basis, there is very good traction in Romania because last year in the same quarter, we had a lot of problems in terms of supply to Romania as we had embargo on exporting to Europe including Romania. Since there is no supply problem any more, there has been considerable improvement in Romania as well.

Overall, the situation is improving in various parts of Emerging Markets including Brazil and other LatAm countries.

Are these sales in emerging markets seasonal or do you expect the run rate to continue?

There would be seasonality in Russia depending on when exactly the winter sets in but overall we remain quite bullish on the markets.

Your R&D spend on a sequential basis has come in marginally lower. Do you expect R&D to be lower or is it a conscious decision?

On a quarter on quarter basis, it is almost similar. There is a difference of only Rs 4 crore -- Rs 416 crore vis-à-vis Rs 412 crore now. But for the year, on an absolute basis, our R&D spend will be similar to what we have spent last year. That means in the second half, R&D is expected to be higher than in first half.

Margins have seen a bump-up. Do you expect this to continue?

Yes. You are right. Both currency as well as ongoing initiatives on cost excellence and productivity improvement is helping but at the same time your overall gross margin for the organisation depends on business mix as well as the product mix. There would be some fluctuations from quarter to quarter.

What are the plants under the warnings letter? One of your plants is going through some kind of global inspection?

At the Duvvada plant, currently an USFDA audit is going on. I cannot comment any further on that. As far as Srikakulam is concerned, we have given response to all the queries that FDA had. They have come back with one more query which we will be answering soon.