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Hyderabad, India, July21, 2008  
 


Dr. Reddy’s Q1 FY09 Revenue at Rs. 15,038 million; EBITDA at Rs. 2,710 million, PAT at Rs. 1,346 million

Hyderabad, India, July 21, 2008: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited financial results for the quarter ended June 30, 2008.

Q1 FY09 Key highlights

  • Revenues increase by 25% to Rs. 15 billion ($350 million) in Q1 FY09 from Rs. 12 billion ($279 million) in Q1 FY08.
  • EBITDA at Rs. 2.7 billion ($63 million) in Q1 FY09 as against Rs. 2.9 billion ($68 million) in Q1 FY08.
  • PAT at Rs. 1.3 billion ($31 million) in Q1 FY09 as against Rs. 1.8 billion ($43 million) in Q1 FY08.
  • Revenues from Global Generics business increase by 25% to Rs. 10.3 billion ($241 million) in Q1 FY09 from Rs. 8.3 billion ($192 million) in Q1 FY08. Growth driven by key markets of North America, Russia and Germany.
    • Revenue growth of 62% in North America driven by a combination of volume growth in key existing products, new product launches in the last 12 months and acquisition of Shreveport facility.
    • Revenue growth of 20% in Germany; significant improvement in supply situation drives volume growth.
    • Revenue growth of 21% in Russia driven by key brands of Nise, Ketorol and Cetrine.
  • Revenues from Pharmaceutical Services & Active Ingredients (PSAI) increase by 27% to Rs. 4.6 billion ($107 million) in Q1 FY09 as against Rs. 3.6 billion ($85 million) in Q1 FY08.
  • Combined revenues from the 3 acquisitions at Rs. 494 million ($11.5 million).
  • During the quarter, the company launched 26 new generic products, filed 20 new generic product registrations and filed 11 DMFs globally.

 

 All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs 42.93

Extracted from the Unaudited Income Statement for the quarter ended June 30, 2008

  Q1 FY 09   Q1 FY 08    
Particulars ($) (Rs.) % ($) (Rs.) (%) Growth %
Total Revenues 350 15,038 100 279 11,983 100 25
Cost of revenues 174 7,475 50 138 5,914 49 26
Gross profit 176 7,563 50 141 6,069 51 25
Selling, General &
Administrative Expenses 		109 4,698 31 73 3,131 26 50
R&D Expenses (1) 24 1,050 7 19 806 7 30
Amortization Expenses 9 391 3 8 351 3 12
Foreign Exchange (gain)/loss, net (3) (147) (1) (7) (285) (2) (49)
Other operating
(income)/expense net		 (1) (29) (0) 0 1 0 -
Operating Income 37 1,598 11 48 2,065 17 (23)
Equity in (loss)/income of affiliates, net 0 0 0 (0) (4) (0) -
Other income/(expenses), net (0) (10) (0) (1) (57) (0) (83)
Income before income
taxes and minority interest 		37 1,589 11 47 2,004 17 (21)
Income tax (expense)/benefit (6) (242) (2) (4) (181) (2) 34
Minority interest - - 0 0 3 0 -
Net income 31 1,346 9 43 1,825 15 (26)
DEPS 0.19 7.97   0.25 10.82    
Exchange rate   42.93     42.93    
Key Balance Sheet Items
  As on 30 June 08   As on 31st March 08    
Cash and cash equivalents 87 3,724   173 17,421    
Investment in securities (current & non-current) 76 3,268   111 4,756    
Borrowings from banks (Short+Long) 443 19,036   455 19,542    
Accounts receivable, net of allowances 206 8,857   159 6,823    
Inventories 304 13,042   259 11,133    
Property, plant and
equipment, net 		448 19,221   391 16,765    


1.
Reimburesement of expenses from Perlecan Pharma Private Limited of nil in Q1 FY09 as against Rs. 31 million in Q1 FY08.
SEGMENTAL ANALYSIS

Global Generics
 
  • Revenues from Global Generics business at Rs. 10.3 billion ($241 million) in Q1 FY09 as against Rs. 8.3 billion ($192 million) in Q1 FY08. YoY growth of 25% driven by key markets of North America, Russia and Germany.
  • Revenues from North America at Rs. 2.8 billion ($66 million) in Q1 FY09 as against Rs. 1.8 billion ($41 million) in Q1 FY08.
    • YoY growth of 62% driven by a combination of volume growth in key existing products, new product launches in the last 12 months and acquisition of Shreveport facility.
    • Revenue from Shreveport facility at Rs. 313 million ($7 million) over two months.
    • Revenue from new product launches at Rs. 56 million in Q1 FY09; 4 new products (including 1 OTC product) launched in Q1 FY09.
    • Revenue from OTC products for Q1 FY09 at Rs. 231 million.
    • During the quarter, the Company filed 4 ANDAs taking the total filings to 126. Total of 72 ANDAs pending at the USFDA addressing innovator sales of $48 billion as per IMS December 2007.
  • Revenues from Europe at Rs. 2.9 billion ($67 million) in Q1 FY09 as against Rs. 2.6 billion ($60 million) in Q1FY08.
    • Revenues from betapharm increase by 20% to Rs. 2.5 billion ($59 million) in Q1 FY09 from Rs. 2.1 billion ($49 million) in Q1 FY08.
      • Significant improvement in the supply situation resulting in higher market share:
        • Market share volume at 2.81% in May 08 as against 2.51% for MAT Mar 08 (Source: NVI volume, May 2008)
        • As of date, 100 products have been transferred to Dr. Reddy’s own supply chain network, out of which 14 products have been transferred to India.
    • Revenues from Rest of Europe at Rs. 341 million ($8 million) in Q1 FY09 from Rs. 456 million ($11 million) in Q1 FY08.
    • During the quarter, 6 dossiers were filed across Europe.
  • Revenues from Russia & Other CIS markets at Rs. 1.9 billion ($45 million) in Q1 FY09 as against Rs. 1.7 billion ($39 million) in Q1 FY08.
    • Revenues in Russia increase to Rs. 1.5 billion ($35 million) in Q1 FY09 as against Rs. 1.2 billion ($29 million) in Q1 FY08. YoY growth of 21% driven by key brands of Nise, Ketorol and Cetrine.
      • Dr. Reddy’s growth rate at 23% as against the industry growth rate of 17.5%. (Source: Pharmexpert MAT Mar 08)
      • Combined revenues from OTC & Hospital segment contributed 24% to total revenues in Q1 FY09.
  • Revenues in India increase by 9% to Rs. 2.2 billion in Q1 FY09 from Rs. 2 billion in Q1 FY08. Growth was primarily driven by key brands of Razo, Stamlo, Omez-DSR and Razo D.
    • Improvement in rank to 9th with a market share of 2.3%. (Source: ORG IMS MAT May 08)
    • Omez- D enters the Top 300 brands in India.
    • 10 new products launched during the quarter, contributing Rs. 29 million in revenues.
    • New product launches in the last 36 months contribute 27% to total revenues in Q1 FY09.
Pharmaceutical Services and Active Ingredients
  • Revenues from this segment increase to Rs. 4.6 billion ($107 million) in Q1 FY09 as against Rs. 3.6 billion ($85 million) in Q1 FY08; YoY growth of 27% driven by growth in markets of North America, India and other markets
    • Revenue from the business & facility acquired from Dow Pharma at Rs. 158 million ($4 million) over two months.
 
Income Statement Highlights
  • Gross profit at Rs. 7.6 billion in Q1 FY09 as against Rs. 6.1 billion in Q1 FY08. Gross profit margins on total revenues at 50% as against 51% in Q1 FY08.
  • R&D investments (net) unchanged at 7% of total revenues in Q1 FY09. Gross R&D investments increase by 25% to Rs. 1,050 million in Q1 FY09 as against Rs. 837 million in Q1 FY08. During the quarter, the Company had no benefit to the R&D line item as compared to a benefit of Rs. 31 million in Q1 FY08.
  • Selling, General & Administration (SG&A) expenses increase to Rs. 4.7 billion (31% of revenues) in Q1 FY09 from Rs. 3.1 billion in Q1 FY08 (26% of revenues). SG&A expenses recorded a growth of 24% in Q1 FY09 as compared to quarterly average run rate of FY08.
  • Other expenses (net) at Rs. 10 million in Q1 FY09 as against other expenses (net) of Rs. 57 million in Q1 FY08. This is primarily on account of net interest expense of Rs. 174 million in Q1 FY09 as against net interest expense of Rs. 254 million in Q1 FY08.
  • Amortization expenses are at Rs. 391 million as compared to Rs. 351 million in Q1 FY08. The increase largely relates to amortization of intangibles in the recently acquired entities.
  • Net income at Rs. 1.3 billion (9% of total revenues) as against Rs. 1.8 billion (15% of total revenues) in Q1 FY08. This translates to a diluted EPS of Rs. 7.97 in Q1 FY09 as against Rs. 10.82 in Q1 FY08.

General Information
The following item was considered and adopted by the Board of Directors of Dr. Reddy’s Laboratories today:
  • The Board of Directors has appointed Dr. Bruce L. A. Carter as an Additional Director on the Board of the Company.
 
About Dr. Reddy's
Established in 1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven research capabilities. The Company is vertically integrated with a presence across the pharmaceutical value chain. It produces finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. The Company conducts research in the areas of cancer, diabetes, cardiovascular, inflammation and bacterial infection.
 
Disclaimer
This press release includes forward-looking statements, as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such factors include, but are not limited to, changes in local and global economic conditions, our ability to successfully implement our strategy, the market acceptance of and demand for our products, our growth and expansion, technological change and our exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future.
 

Contact Information

Investors and Financial Analysts:

Nikhil Shah at nikhilshah@drreddys.com or on +91-40-66511532
Milan Kalawadia (North America) at mkalawadia@drreddys.com or on +1-9082034931

Media

M Mythili at mythilim@drreddys.com or on +91-40-66511620

Notes

1. Financial discussions are on a consolidated basis as per the US GAAP.

2. Detailed analysis of the financials is available on the Company’s website at www.drreddys.com