Dr. Reddy's Laboratories, India's No. 2 drugmaker by sales, reported a better-than-expected 32% rise in quarterly net profit as four new generic drugs drove sales in North America -- its biggest market.

Demand for cheaper generic medicines from companies like Dr Reddy's and local rivals Ranbaxy Laboratories, Cipla and Sun Pharmaceutical Industries is booming as developed nations battle rising healthcare costs.

Indian drugmakers account for about a third of applications to sell generic drugs in the United States but they face intense competition, as well as an increase in lawsuits from rival drugmakers and a stricter U.S. regulatory environment.

Consolidated net profit grew to 4.07 billion rupees in the second quarter ended September, with revenue jumping 27% to 28.81 billion rupees.

That was better than a consensus of 3.73 billion rupees on net sales of 27.83 billion rupees, according Thomson Reuters I/B/E/S.

For the North American market alone, the launch of the new drugs lifted revenue 4% to 9.3 billion rupees ($172.2 million), although some analysts expressed concern.

"The company's existing products in the U.S. are seeing rising competition," said Deepak Malik, analyst at brokerage Emay.

"U.S. sales must grow in the remaining year and should cross $200 million in the current quarter, if the company has to reach guidance."

The growth in its India business was disappointing, he added.

Sales in India grew 12% to 3.9 billion rupees in the quarter. Its global services and bulk drugs segment grew 33% to 7.9 billion rupees.

Dr Reddy's has a market valuation of some $5.4 billion.

The stock has gained nearly 9% in the year to date, underperforming the Mumbai market - up about 20% - as the drugmaker has missed analysts' estimates for the previous two quarters.