UPDATE 1-India Dr Reddy's Q4 net falls 68pct, misses f'cast

(Adds details, share price)

MUMBAI May 20 (Reuters) - India's Dr. Reddy's Laboratories Ltd (REDY.BO) on Tuesday reported a worse-than-expected 68 percent fall in quarterly profit after an exclusive marketing deal for a generic drug expired, sending its shares down 2.5 percent.

The company said net profit fell to 1.03 billion rupees ($24 million) for the fiscal fourth quarter ended March, from 3.25 billion rupees a year earlier when it was helped by one-time gains from a 180-day exclusivity for the generic version of GlaxoSmithKline's (GSK.L) anti-nausea drug Zofran.

Dr. Reddy's (RDY.N), the only Indian drugmaker listed in New York, said revenue dropped to 13.25 billion rupees from 15.57 billion. A Reuters poll had forecast a net profit of 1.17 billion rupees on revenue of 12.89 billion.

Last month, Ranbaxy Laboratories (RANB.BO), India's biggest drugmaker by sales, reported a forecast-beating 7 percent rise in net profit to 1.53 billion rupees. Dr. Reddy's said revenue from north American generic business more than halved to 2.5 billion rupees in the March quarter from 5.6 billion rupees a year earlier.

Expenses rose to 32 percent of revenue in the quarter from 22 percent a year ago, it said.

In January, the company said it hoped for a better performance in the new fiscal year on improved generics sales in India and Russia and a turnaround of its underperforming German business.

Germany's Betapharm, which Dr. Reddy's bought in 2006 for $572 million, has been a drag on earnings due to supply constraints and price falls.

Hyderabad-based Dr. Reddy's is moving Betapharm's manufacturing operations to India and other manufacturers within Europe.

Shares in Dr. Reddy's, which has a market worth of about $2.6 billion, ended down 1.75 percent at 638.35 rupees after falling as low as 634 rupees after the results in a weak Mumbai market.

The stock had lost 19.6 percent in the March quarter, while the main BSE index .BSESN dropped 23 percent.

In the March quarter, Dr. Reddy's completed acquisitions of Dow Chemicals Co's (DOW.N) Dowpharma small molecules business, and BASF's BASF.DE pharmaceutical contract manufacturing business for undisclosed sums.

It also bought Italian generics firm Jet Generici Srl, and said it would collaborate with Skyepharma Plc (SKP.L) on new products, utilising Skyepharm's proprietary drug delivery system.

Analysts remain largely positive on the sector, as drugs with annual U.S. sales of $50 billion are expected to go off patent by 2010, creating more opportunities for Indian firms to sell generic versions, or cheap copies of branded products. ($1=42.6 rupees) (Reporting by Narayanan Somasundaram; Editing by Ranjit Gangadharan)