I've talked about Dr. Reddy's Laboratory's (NYSE:RDY) roller-coaster sales growth; it's the nature of the generic drugmaking business. Last quarter, the company was at a peak, sporting a 125% year-over-year increase in quarterly sales, but in the latest quarter, sales descended into a valley, to the screams of all the passengers riding along.

Revenue for the quarter was down 14% compared with the same quarter last year. Last year's stellar quarter was because of the launch of generic versions of Merck's (NYSE:MRK) Zocor and Proscar. Excluding the upside from authorized generics from both quarters, Dr. Reddy's actually experienced a nice 10% increase in sales.

Most of the generic drug sales growth came from the version of GlaxoSmithKline's (NYSE:GSK) anti-nausea blockbuster, Zofran, which made it to the market at the beginning of the year. During the six-month exclusive sales period, Dr. Reddy's was able to pick up more than 60% of the market, with its generic priced at 40% to 45% of the name brand. The exclusivity period for the generic expired June 22, and revenue from sales has already begun to drop because of competition from other generic drugmakers pushing prices down to 2% of the brand-name price.

Even with the drop in revenue, Dr. Reddy's earnings were up 30.5% because the drugmaker was able to push gross margins up to 51% from 43% a year ago. Most of the increase was due to a change in the mixture of products it sells. For instance, it reported an impressive gross margin of 72% for the international sales of its finished dosages.

During the quarter, Dr. Reddy's filed eight abbreviated New Drug Applications (aNDAs), including three aNDAs in first-to-file positions. The last three would give the drugmaker six-month exclusive sales, although it might have to deal with patent issues. Dr. Reddy's was dealt a setback in May when a U.S. court upheld a patent of Eisai's Aciphex that it and fellow generic drugmaker Teva Pharmaceutical (NASDAQ:TEVA) were trying to break.

Of course, the roller-coaster analogy only goes so far. On a roller coaster, the peaks become lower and lower until eventually the ride stops. That sure doesn't seem like the path that Dr. Reddy's is on. Instead, it will try to increase the sales peaks as the ride goes along and try to minimize the dips as much as possible. If investors can stomach the ride with generic drugmakers, Dr. Reddy's is certainly one to take a look at, especially because it sells other pharmaceuticals that should level out the peaks and valleys.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor recommendation. The Fool's disclosure policy is rock-solid.