The Hyderabad-based company's net profit in the July-September period fell to 2.67 billion rupees (US$67 million; EUR47 million) from 2.8 billion rupees in the same quarter last year, Dr. Reddy's said in a statement.
Sales declined 36.7 percent to 12.67 billion rupees (US$319 million; EUR224 million) in the fiscal second quarter from 20.04 billion rupees in the same period a year earlier.
The company partially attributed the sharp drop in sales to the absence of exclusive selling rights for new lines of generic drugs in the U.S. market.
Such rights give a generic drug maker an edge over its rivals for a limited period.
Dr. Reddy's had seen its sales surge in the same quarter last year because of an agreement with Merck & Co. Inc. that gave Dr. Reddy's an exclusive right to sell generic copies of the popular cholesterol-lowering drug Zocor in the U.S. market for 180 days. Dr. Reddy's also won similar rights to sell another generic drug - finasteride - in the United States.
Sales from these two drugs totaled about 7.8 billion rupees in the July-September quarter of 2006, the company said. The company didn't say how these drugs fared in the latest quarter.
However, the earning numbers, which conform to U.S. accounting standards, were better than expected. Analysts polled by Dow Jones Newswires had expected a much bigger slump - about 40 percent - in Dr. Reddy's profit in the latest quarter.
Dr. Reddy's is listed in India as well as on the New York Stock Exchange. The company reported its earnings after close of stock trading in India.
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