Indian drugmaker Divi’s beats profit view for second quarter on API boost

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(Reuters) -Indian drugmaker Divi’s Laboratories reported second-quarter profit above analysts’ estimates on Friday, helped by its business that focuses on customised production of chemical compounds used in drugs.

Consolidated net profit rose to 6.89 billion rupees ($78.39 million) in the quarter ended September 30 from 5.10 billion rupees a year earlier, the Hyderabad-based company said.

That was above analysts’ average estimate of 5.87 billion rupees, according to data compiled by LSEG.

Revenue from operations rose 16% to 21.15 billion rupees, compared with analysts’ estimates of 24.86 billion rupees.

Indian generic drugmakers, which earn a significant chunk of their revenue from the United States, have been struggling with weak pricing in the world’s top economy amid stiff competition.

Offering some respite, Divi’s and its peers Syngene and Sai Life Sciences, which provide contract development and manufacturing services to drugmakers, have seen increased interest from global drug companies seeking to diversify their supply chains and limit reliance on China.

Divi’s, one of India’s largest manufacturers of active pharmaceutical ingredients (API), exports to more than 100 countries and counts the United States and Europe as its top markets.

APIs are key chemical components in a drug that produce the intended therapeutic effects.

Divi’s is also set to benefit from diabetes and weight-loss drugs manufacturers such as Eli Lilly as demand for these drugs soar in global markets.

Larger peers Cipla and Dr Reddy’s also reported a rise in their second-quarter profit.

($1 = 87.8950 Indian rupees)

(Reporting by Komal Salecha in Bengaluru; Editing by Subhranshu Sahu)