Close
Hyderabad, India, May 18, 2007  
 


Dr. Reddy’s FY07 revenue at Rs. 65,095 million (US$ 1.5 billion);
Net income at Rs. 9,327 million (US$ 216 million);

  • Year-on-Year revenues more than double; cross $1.5 billion landmark.
  • Excluding AG products, revenues cross $1 billion mark.
  • Profit after tax of $216 million and Cash flows from operations of $274 million.
  • Several new product launches with significant market share gains.
  • Improved market ranking in key markets and therapeutic segments.
  • Expanded geographical footprint with operations in new countries.
  • Continued product pipeline expansion across businesses.

Hyderabad, India, May 18, 2007: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited financial results for the year ended March 31, 2007.

Key Revenue Highlights

  • Revenues at Rs 65 billion (USD 1,510 million) as against Rs 24 billion (USD 563 million) in FY06. YoY growth of 168%.
    • Revenues from international markets increased by 250% to Rs. 56 billion (USD 1,297 million)
    • Revenues from India increased by 11% to Rs. 9 billion. (USD 213 million)
  • Revenues excluding the contribution from authorized generics and acquisitions, increased by 58% to Rs 36 billion (USD 833 million) in FY07 from Rs 23 billion (USD 528 million) in FY06.
  • Revenues from authorized generics contributed 24% and acquisitions contributed 21% respectively to total revenues in FY07.
  • International revenues account for 86% of total company revenues in FY07 compared to 66% in FY06.
  • Revenues in branded formulations – rest of world increase by 24% to Rs.12 billion (USD 286 million) in FY07 from Rs.10 billion (USD 231 million) in FY06 driven by growth across key markets.
  • Revenues from international markets grew by 34% to Rs. 5.9 billion (USD 137 million), driven by growth in Russia, Romania, Venezuela and CIS region.
  • Revenues from India grew by 16% to Rs. 6.4 billion (USD 149 million), driven by growth in key brands.
  • Revenues in the Active Pharmaceuticals Ingredients (APIs) increase by 44% to Rs 11.8 billion (USD 276 million) in FY07 from Rs. 8.2 billion (USD 191 million) in FY06 driven primarily by sales of sertraline, rabeprazole and ramipril.
  • Revenues from custom pharmaceuticals services increase to Rs 6.6 billion (USD 153 million) from Rs 1.3 billion (USD 31 million) in FY06. Excluding contribution from acquisitions, revenues grew from Rs. 522 million (USD 12 million) to Rs.1,203 million (USD 28 million), driven by growth in customer base and product portfolio.
  • Revenues in Europe generics (including betapharm) at Rs 9.6 billion (USD 223 million) as against Rs 2.4 billion (USD 56 million) in FY06.

 All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs 43.10

EXTRACT FROM THE UNAUDITED INCOME STATEMENT

  FY 07   FY 06    
Particulars ($) (Rs.) % ($) (Rs.) (%) Growth %
Total Revenues 1510 65,095 100 563 24,267 100 168%
Cost of revenues 794 34,220 53 288 12,417 51 176%
Gross profit 716 30,876 47 275 11,850 49 161%
Selling, General &
Administrative Expenses 		326 14,051 22 186 8.029 33 75%
R&D Expenses (1) 57 2,463 4 50 2,153 9 14%
Amortization Expenses 36 1,571 2 10 420 2 274%
Write down of Intangible 41 1,770          
Other operating
(income)/expense net (2)		 -2 (67) 0 -7 (320) (1) -79
Operating income before
forex loss/(gain)		 257 11,088 17 36 1568 6 607%
Forex Loss/(Gain) -3 (137) 0 3 126 1 NC
Operating income/(loss) 260 11,225 17 33 1,442 6 678%
Equity in loss of affiliates 1 63 0 2 88 0 -28
Other expenses/(income) net 15 661 1 -12 (534) (2) NC
Income before income
taxes and minority interest 		244 10,501 16 44 1,888 8 456%
Income tax (benefit)/expense 28 1177 2 6 258 1 356%
Minority interest 0 (4) 0 0 0 0  
Net income 216 9327 14 38 1,630 7 472%
DEPS   58.56     10.62    
Exchange rate   43.10     43.10    
Key Balance Sheet Items
  As on 31st Mar 07   As on 31st Mar 06    
Cash and cash equivalents 431 18,588   227 9,788    
Borrowing from banks
(Short + Long) 		574 24,754   719 30,995    
Accounts receivable net of
allowances		 174 7,519   111 4,802    
Inventories 175 7,546   160 6,895    
Property, plant and
equipment, net 		288 12,428   211 9,086    



1.
Income recognition under Generics R&D partnership with ICICI venture amounting to Rs 453 million in FY 07 and Rs. 405 million in FY 06. R&D Expense reimbursed by Perlecan Pharma in FY07 at Rs. 373 million
2.
Includes profit on sale of finished dosages facility at Goa amounting to Rs. 388 million in FY 06.
3.
including restricted cash

              

Revenue Mix by Segment
(in million)

  FY07
$		 FY07 INR as a % FY06$ FY06 INR as a % Growth %
APIs 274 11,827 18 191 8,238 34 44
India 48 2,075 18 53 2,296 28 -10
International 226 9,752 82 138 5,942 72 64
Branded Formulations 286 12,319 19 230 9,926 41 24
India 149 6,415 52 128 5,526 56 16
International 137 5,904 48 102 4,400 44 34
Generics 771 33,224 52 94 4,056 17 719
Emerging Business 19 824 1 16 691 3 19
Custom Pharmaceutical Services 153 6,600 10 31 1,327 5 397
Others 7 301 0 1 29 0  
Total 1,510 65,095 100 563 24,267 100 168

 
1.
Includes betapharm revenues of Rs. 8,004 million in FY07 and Rs. 705 million in FY 06 (starting 3rd March)
2.
Includes revenues from CPS business in Mexico of Rs. 5,397 million in FY 07 and Rs. 805 million in FY 06 (starting 31st December)
 
Revenue Mix by Geography
(in million)
 
  FY07
$		 FY07 INR as a % FY06$ FY06 INR as a % Growth %
India 213 9,179 14 192 8,272 34 11
North America 657 28,337 44 92 3.984 16 611
Russia 83 3,584 6 62 2,676 11 34
Europe 344 14,839 23 100 4,326 18 243
Others 213 9,156 14 117 5,009 21 83
Total 1,510 65,095 100 563 24,267 100 168
 
Active Pharmaceutical Ingredients (APIs)
 
  • Revenues at Rs 11.8 billion as against Rs 8.2 billion in FY06. YoY growth of 44%
  • Revenues outside India at Rs 9.8 billion as against Rs 5.9 billion in FY06. YoY growth of 64%; Growth across key international markets.
  • Revenues in Europe increased by 47% to Rs. 2.1 billion in FY07 from Rs. 1.4 billion in FY06 primarily led by growth of key products of sertraline, finastride, losartan and ramipril.
  • Revenues in India at Rs 2.1 billion as against Rs 2.3 billion in FY06. YoY decline of 10% primarily on account of decrease in sales of quinolones due to significant decline in prices.
  • Revenues in rest of the world increased to Rs. 5.6 billion in FY07 from Rs. 2.9 billion in FY06 primarily driven by growth in key products of sertraline, rabeprazole and clopidogrel.
  • Revenues in North America at Rs 2.0 billion in FY07 as against Rs 1.7 billion in FY06. This increase was on account of increase in sales of new products as well as key commercialized products such as naproxen sodium, naproxen and sertraline.
  • The Company filed 23 US DMFs during the year taking the total filings to 104. The company also filed 11 DMFs in Canada, 9 DMFs in Europe and 26 DMFs in RoW including 6 in Japan and 5 in Turkey.
 
Generic Formulations
 
  • Revenues in this segment at Rs 33.2 billion as against Rs. 4.1 billion in FY06.
  • North America contributed 71% to the total revenues & Europe (including betapharm) contributed 29%.
  • In North America, revenues increased to Rs. 23.6 billion in FY07 from Rs. 1.6 billion in FY06. Combined revenues of simvastatin and finasteride (AG products) were at Rs. 15.8 billion. Fexofenadine, launched in April, contributed Rs. 2.4 billion and ondansetron launched in Dec 2006 (under 180 day exclusivity) contributed Rs. 2.9 billion in revenues during the year.
  • In Europe revenues increased to Rs. 9.6 billion in FY07 from Rs. 2.4 billion in FY06.
          - Revenues from betapharm (Germany) were at Rs. 8,004 million in FY 07 as compared to Rs. 705 million in FY 06,         which represents 28 days of revenue starting 3rd March 2006.
          - Revenues from UK market decreased to Rs. 1.5 billion in FY 07 from Rs. 1.7 billion in FY 06. This decrease was on          account of significant decline in prices of omeprazole and amlodipine partially offset by increase in volumes.
          - Revenues from Spain at Rs. 61 million.
  • During the year, the company had a total of 33 filings (including 9 partner products), taking the total filings to 104. Total of 69 ANDAs pending at the USFDA addressing an innovator sales of $ 57 billion as per IMS December 2006. During the year, the company also received 19 approvals including tentative approvals.
 
Branded Formulations - International
  • Revenues at Rs 12.3 billion, an increase of 24% over FY06. The growth was primarily driven by the performance of Russia, Romania, Venezuela & CIS markets.
  • Revenues in Russia increase by 35% to 3.5 billion as against Rs 2.6 billion in FY06. This growth was primarily driven by increase in sales from key brands of Omez, Cetrine, Nise and Keterol.
            - Market ranking improved to 15th position in the retail segment from 24th position in the last 12 months (Source:            Pharmexpert MAT March 2007)
            - In the retail segment, the company recorded a growth of 36.5% as against the market growth of 23.7% (Source:            Pharmexpert MAT March 2007, retail segment)
  • Revenues in the CIS markets increase by 35% to Rs 1,118 million as against Rs 827 million in FY07. This growth was primarily driven by increase in sales from Ukraine and Kazakhstan.
  • Revenues in RoW markets increase by 25% to Rs 915 million as against Rs 731 million in FY06. The growth was primarily driven by increase in sales from Venezuela, Jamaica South Africa, and Myanmar partially offset by decrease in Vietnam.
  • Revenues in Central and Eastern Europe grew by 46% to Rs 377 million as against Rs 259 million in FY06. This growth was driven by significant increase in revenues from Romania.
 
Branded Formulations - India
  • Revenues in India increase by 16% to Rs 6.4 billion in FY07 from 5.5 billion in FY06.
           - The Company is ranked the fastest growing company among the Top 10 companies in terms of prescription          growth. (Source: CMARC November 2006 to February 2007)
           - The Company is ranked the 2nd fastest growing company in the Top 10 growing ahead of the industry growth rate.           (Source: ORG IMS MAT March 2007)
  • Growth primarily driven by performance of key brands of Omez, Nise, Stamlo and Razo.
  • Key brands of Omez and Nise recorded a growth rate of 13.4% and 31.7% respectively as against market growth rate of 3.8% and 17.4% respectively. (Source: ORG IMS MAT March 2007)
  • New products launched during the year, totaling 21, contributed Rs.247 million in revenues in FY07.
           - Leon (Levofloxacin), is ranked 6th among all the new product introductions in the last 12 months (Source: ORG IMS           MAT 2007)
           - New product launches in the last 3 years have contributed 21% to total revenues during the year.
 
Custom Pharmaceutical Services (CPS)
Revenues from CPS increased to Rs 6.6 billion in FY07 from Rs 1.3 billion in FY06.
 
  • Revenues from the acquisition in Mexico at Rs. 5,397 million in FY07 as compared to Rs. 805 million in FY 06, which also includes three months revenues from Mexico (starting 31st Dec 2006)
  • Excluding contribution from the acquisition, revenues increased from Rs. 522 million in FY 06 to Rs. 1,203 million in FY 07, driven by growth in customer base and product portfolio.
 
Income Statement Highlights
 
  • Gross profit increased to Rs. 30.9 billion in FY07 from Rs. 11.9 billion in FY06. Gross profit margins on total revenues at 47% as against 49% in FY 06. Revenues from authorized generics contributed 24% to total revenues and earned gross margin significantly below company average gross margin. The decline in Gross Margin % to sales on account of the authorized generic products was partially offset by high margin revenues in key product launches of ondansetron and fexofenadine.
  • R&D investments (net) at 4% of total revenues in FY07 as against 9% in FY06. Gross R&D investments increased by 29% to Rs 3.3 billion as against Rs 2.6 billion in FY06. During the year, the Company recognized Rs 826 million under its R&D partnerships as a benefit to the R&D line item as compared to Rs. 405 million recognized in FY 06.
  • Selling, General & Administration (SG&A) expenses increased by 75% to Rs 14.1 billion. This increase is primarily on account of consolidation of the two acquisitions. As % to revenues adjusted for authorized generics and ondansetron, SG&A has lowered to 30% from 33% in FY06.
  • Other expense (net) was at Rs 662 million in FY07 as against other income (net) of Rs 534 million in FY06. This is primarily on account of net interest expense of Rs.1,054 million in FY07 as against net interest income of Rs. 419 million in FY06. This is primarily on account of the full year effect of the long-term obtained in March 2006.
  • Write down of intangible amounting to Rs. 1,770 million comprises -
               - Write down of Rs. 214 million relating to Trigenesis assets,
               - Write down of Rs. 1,557 million of product related intangibles at betapharm. This write down is the result of the healthcare reforms and consequent industry reaction leading to significant price erosion in the market.
  • Amortization at Rs. 1,571 million as compared to Rs. 420 million in FY 06. This includes Rs1,302 million relating to recurring amortization of intangibles in betapharm, Spain (acquisition of products) and acquisition in Mexico.
  • Net income at Rs 9.3 billion (14% of total revenues) as against Rs 1.6 billion (7% of total revenues) in FY06. This translates to a diluted EPS of Rs 58.56 as against Rs 10.62 in FY06.
  • During FY07, the Company generated cash flow from operations of Rs.11.8 billion.
  • During FY07, the Company incurred capital expenditure (net) of Rs 4,393 million
all figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs 43.10
 
Q4 FY07 Financial Snapshot
Extracted from the Unaudited Income Statement for the year ended March 2007
 
  Q4 FY 07   Q4 FY 06    
Particulars ($) (Rs.) % ($) (Rs.) (%) Growth %
Total Revenues 361 15,573 100 161 6,932 100 125
Cost of revenues 135 5,818 37 94 4,037 58 44
Gross profit 226 9,755 63 67 2,895 42 237
Selling, General &
Administrative Expenses 		80 3,433 22 53 2,292 33 50
R&D Expenses (1) 20 852 5 16 678 10 26
Amortization Expenses 10 451 3 4 162 2 178
Write down of Intangible 41 1,770          
Other operating
(income)/expense net (2)		 1 25 0 0 4 0 NC
Operating income before
forex loss/(gain)		 75 3,224 21 (6) (241) (3) NC
Forex Loss/(Gain) (5) (205) (1) 0 19 0 NC
Operating income/(loss) 80 3,429 22 (6) (260) (4) NC
Equity in loss of affiliates 1 29 0 1 49 1 -41
Other expenses/(income) net (3) (113) (1) 0 (12) 0 NC
Income before income
taxes and minority interest 		82 3,513 23 (7) (297) (4) NC
Income tax (benefit)/expense 6 260 2 1 (61) (1) NC
Minority interest 0 (1) 0 0 1 0 -
Net income 75 3,252 21 (5) (237) (3) NC
Exchange rate   43.10     43.10    
 
(1) Nil Income recognition under Generics R&D partnership with ICICI venture in Q4 FY 07 as against Rs. 60 million in Q4 FY 06.       Reimbursement of expenses from Perlecan Pharma Private Limited of Rs. 85 million in Q4 FY 07
 
 
Revenue Mix by Segment
(in million)
 
  Q4FY07
$		 Q4FY07 INR as a % Q4FY06$ Q4FY06 INR as a % Growth %
APIs 90 3,891 25 49 2,091 30 86
         India 11 467 12 13 547 26 (15)
         International 79 3,424 88 36 1,544 74 122
Branded Formulations 64 2,743 18 48 2,080 30 32
         India 34 1,479 54 29 1,269 61 17
         International 29 1,264 46 19 811 39 56
Generics 155 6,693 43 37 1,574 23 325
Emerging Business 5 194 1 4 164 2 18
Custom Pharmaceutical Services 45 1,945 12 24 1,037 15 88
Others 2 107 1 0 (14) 0  
Total 361 15,573 100 162 6,932 100 125
 
Revenue Mix by Geography
(in million)
 
  Q4FY07
$		 Q4FY07 INR as a % Q4FY06$ Q4FY06 INR as a % Growth %
India 49 2,123 14 45 1,918 28 11
North America 172 7,402 48 35 1,529 22 384
Russia 16 700 4 9 409 6 71
Europe 79 3,414 22 37 1,584 22 116
Others 45 1,934 12 35 1,492 22 30
Total 361 15,573 100 161 6,932 100 125
 
Business Highlights
  • Revenues at Rs 15.6 billion as against Rs 6.9 billion in Q4 FY06. YoY growth of 125%.
  • Excluding revenues from ondansetron and acquisitions, revenues grew by 53% to Rs. 10.5 billion in Q4 FY07.
  • Revenues from APIs increase by 86% to Rs. 3.9 billion in Q4FY07 as against Rs 2.1 billion in Q4 FY06 driven by sales of key products of sertraline and rabeprazole.
  • Ondansetron launched in the US in Dec 2006 (under 180 day exclusivity) contributed Rs. 2.7 billion in revenues.
  • Revenues in Russia increased to Rs. 700 million in Q4 FY07 from Rs. 409 million in Q4 FY06. This increase was driven by performance of key brands of Nise, Omez and Cetrine.
  • Revenues in India increased to Rs. 2.1 billion in Q4 FY07 from Rs.1.9 billion in Q4 FY06. The increase was driven by growth in sales of key brands.
  • Revenues from CPS increased to Rs. 1.9 billion in Q4 FY07 from Rs 1.0 billion in Q4 FY06. A substantial part of this growth was driven by sales from Mexico.
 
Income Statement Highlights
 
  • As a share of revenues, the gross profit ratio increased to 63% of revenues in Q4FY07 from 42% in Q4 FY06. This is relatively higher compared to the previous quarters as well. The significant expansion in the margins for the quarter was largely driven by the high margins enjoyed by ondansetron during exclusivity as well as higher margins in the API and CPS businesses during the quarter. Further, in the previous quarters, the Company recorded significant sales from authorized generics products which earned significantly lower margins resulting in lower margins at the company level.
  • Selling, General and Administration (SG&A) expenses increase by 50% to Rs 3.4 billion. This compares with the 125% growth in revenues.
  • R&D investments increased by 26% to Rs 852 million as against Rs 678 million in Q4 FY06. As a share of revenues, R&D expenditure is at 5% as against 10% in Q4 FY06. During the quarter, the Company recognized Rs 85 million under its R&D partnerships as a benefit to the R&D line item as compared to Rs. 60 million recognized in Q4 FY 06.
  • Write down of intangible of Rs. 1,770 million.
  • Amortization at Rs. 451 million compared to Rs 162 million in Q4 FY 06. Current quarter includes Rs. 387 million relating to intangibles in betapharm, Spain (acquisition of products) and acquisition in Mexico.
  • Net income at Rs 3,252 million as against net loss of Rs 237 million in Q4 FY06.
 

General information

The following items were considered and adopted by the Board of Directors of Dr. Reddy’s Laboratories today:

  • Audited financial results for the year ended March 31, 2006 as required under Clause 41 of the listing agreement.
  • The Board of Directors has recommended a final dividend of Rs. 3.75 per share of face value of Rs. 5 each.
  • The Board of Directors has appointed Dr. J. P. Moreau as 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

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