May 18 (Bloomberg) -- Dr. Reddy's Laboratories Ltd., India's third-largest drugmaker, had profit of 3.25 billion rupees ($79.5 million) in the fourth quarter after a year- earlier loss, helped by sales of a treatment for nausea.

Net income in the three months ended March 31 compares with a loss of 237 million rupees in the same period a year earlier. Sales more than doubled to 15.6 billion rupees, the company, based in the southern Indian city of Hyderabad, said in an e- mailed statement today.

Reddy's began selling its copy of GlaxoSmithKline Plc's nausea antidote Zofran in the U.S. in December without other generic competition for 180 days. Sales of the drug, also known as ondansetron, helped buffer the impact of lower prices for Reddy's other top sellers, including versions of Merck & Co.'s Zocor and Proscar medicines.

``The company has definitely turned the corner, especially if you look at its product pipeline,'' said R.K. Gupta, who manages the equivalent of $86 million including shares of Dr. Reddy's at Credit Capital Asset Management in New Delhi. ``North American sales should continue to stay strong. Generics are doing very well there.''

Reddy's built a $2.6 billion company over two decades by copying blockbuster drugs such as Bayer AG's Cipro and exporting them for a fraction of the price. Selling versions of Merck's cholesterol-lowering drug Zocor and prostate treatment Proscar helped Dr. Reddy's reverse a four-year decline in sales in the U.S., the world's largest pharmaceuticals market.

Pfizer Inc.'s Norvasc blood pressure medicine and GlaxoSmithKline Plc's Coreg heart disease pills are among brand- name drugs with total annual sales of $6.9 billion whose patents are due to expire this year.

When two competing generic drugs are introduced, the average generic price can drop to half the cost of the brand- name product, according to a U.S. Food and Drug Administration study.

Reddy's shares fell 12.1 rupees, or 1.8 percent, to end trading at 665.75 rupees on the Bombay Stock Exchange. The stock has declined 18 percent this year, making it the worst performer on the exchange's 23-member Healthcare Index.

Ondansetron Sales

Sales of generic drugs rose fourfold to 6.69 billion rupees in the quarter from 1.57 billion rupees a year earlier, the company said. Sales in North America, Reddy's biggest market, rose to 7.4 billion rupees from 1.53 billion rupees, while sales of ondansetron, or generic Zofran, contributed 2.7 billion rupees to quarterly revenue.

Net income surged fivefold to 9.33 billion rupees, or 58.6 rupees a share, in the 12 months ended March 31, from 1.63 billion rupees, or 10.6 rupees, in the same period a year earlier, Reddy's said. Sales for the year climbed 168 percent to 65.1 billion rupees.

Spending on research and development increased 14 percent to 2.46 billion rupees last fiscal year, while the amount of cash and cash equivalents as at March 31 almost doubled to 18.6 billion rupees, from a year-earlier 9.79 billion rupees.

Reddy's said it will pay a final dividend of 3.75 rupees per share of face value of 5 rupees each.

To contact the reporter on this story: Ashok Bhattacharjee in New Delhi at ashokb@bloomberg.net.

Last Updated: May 18, 2007 07:25 EDT