Dr Reddy's Labs proved the biggest loser in the Sensex in morning trades on Friday on rumours that a crucial molecule of the company in trial has been rejected.
The rumours plunged Dr Reddy's in gloom, the scrip having lost 4.32% to Rs 850.60 by 10:45 IST. The domestic share follows the company's ADR - RDY - downward, which fell 50 cents to $18.20 on the NYSE. A total of 49,501 Dr Reddy's shares changed hands on BSE till 10:45 IST.
In 25 sessions between 15 January and 20 February 2003, the Dr Reddy's Laboratories stock shed 11.4% to Rs 889.05 from Rs 1,003.
Rumours are plaguing the counter on Friday that a molecule from the company's stable in clinical trials has failed. The market has not got wind of which one of the five molecules of the company currently in process has failed. As of now, the molecules by the company are DRF 8417, DRF 2593, DRF 4832, DRF1042 and DRF 1644. Of which, DRF 2593 is in the phase II clinical trial, while others are in pre-clinical and phase I clinical trial.
Technical weakness is also cited as one of the reasons for the current weakness on the DRL counter. The market has it that foreign investor Salomom Smith Barney is offloading on the counter.
The company has been beset by negative developments in the past few sessions. One of these was that the company dropped three new compounds (DRF 4848, DRF 3188 and DRF NPPC) from its research pipeline. The same were undergoing/ completed pre-clinical development or animal trials. However, the company did not provide any reasons for this move.
Meanwhile, players are eagerly awaiting the launch of DRL's modified version of Norvasc. The company was expected to launch amlodipine maleate (modified version of Norvasc), a blockbuster hypertension drug in August 2003, but it has delayed the launch to December 2003. Amlodipine maleate differs chemically from the amlodipine besylate form of Pfizer's anti-angina and hypertension blockbuster, which had sales of $2.5 billion in 2001.
DRL has also disappointed the market with its Q3 results. For the third quarter ended 31 December 2002, the company reported a 5% fall in sales to Rs 374.45 crore and a 42% drop in profit after tax to Rs 93.16 crore.
The fall in Q3 sales was primarily on account of a 32% drop to Rs 78.55 crore in generic sales. This, in turn, was the result of the company's losing its exclusivity in sales of fluoxetine during the quarter.
Other latest developments in the company were positive. For instance, DRL's joint venture with Gribbles of Australia, Pathnet India, is planning to expand by establishing a hub facility along with satellite centres and patient centres in all metros of the country this year. The JV company will be investing $40 million (about Rs 100 crore) in the next four years. The expansion will be funded by both partners to the joint venture.
The promoters' holding in DRL's equity is 26%, while that of the public, domestic and foreign institutions was 15%, 11.78% and 46%, respectively.
BSE code: 500124
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