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Indian generic drugmaker Zydus Lifesciences reported a bigger-than-expected rise in third-quarter profit on Friday, driven by strong sales in its domestic and overseas markets.

Consolidated net profit for the company rose 27% to 7.90 billion rupees (about $95 million) for the three months ended Dec. 31, beating analysts' average estimate of 6.83 billion rupees, as per LSEG data.

Separately, Zydus Lifesciences approved the buyback of shares worth six billion rupees via tender offer route at a price of 1,005 rupees, a 25% premium to its closing price on Thursday.

Shares of the company rose 2.4% after the results before erasing gains to trade 4.2% lower.

Total revenue from operations rose 6% to 45.05 billion rupees, led by a 16% rise in the drugmaker's India formulations business and a 30% climb in its European and emerging markets business, which includes Mexico and African markets.

However, its U.S. formulations business fell 4.3% from last year.

India's generic drugmakers, which draw a significant share of revenue from the crucial U.S. market, are recovering from the effects of eroding prices in the largest drug market in the world.

Zydus Lifesciences competes with Cipla and Dr Reddy's for selling the generic version of Bristol-Myers Squibb's popular cancer drug Revlimid in the United States.

India and the U.S. make up almost 85% of Zydus Life's total revenue.

Cipla, Dr Reddy's and Sun Pharma also beat their third-quarter profit estimates on strong domestic and U.S. sales.

On Thursday, its unit Zydus Wellness reported a slump in December-quarter profit on higher tax expenses.

($1 = 83.0030 Indian rupees)