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Hyderabad, India, May 6, 2010  
 


Dr. Reddy’s FY10 Financial Results,
Revenues at Rs. 70.3 billion ($1.56 billion),
EBITDA Adjusted* at Rs. 15.8 billion ($352 million),
Profits after Tax Adjusted* at Rs. 9.2 billion ($205 million)

Hyderabad, India, May 6, 2010: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited financial results for the full year ended March 31, 2010 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Consolidated revenues are at Rs. 70.3 billion ($1.6 billion) in FY10 versus Rs. 69.4 billion ($1.5 billion) in FY09, or a year-on-year growth of 1%. Excluding the revenues from authorized generic sales of sumatriptan, the growth of 9%, is largely driven by the Branded Generics segment of Global Generics. Revenues for Q4 FY10 are at Rs. 16.4 billion ($365 million).
    • Revenues from Global Generics business for FY10 are at Rs. 48.6 billion ($1.1 billion) representing a marginal decline of 2% over previous year. Excluding the revenues from authorized generic sales of sumatriptan, the growth is at 8%. Revenues for Q4 FY10 are at Rs. 11.2 billion ($109 million).
    • Revenues from PSAI are at Rs. 20.4 billion ($454 million) in FY10 or a growth of 9%. Revenues for Q4 FY10 are at Rs. 4.9 billion ($109 million).
  • The impairment charge in FY10 amounting to Rs. 8.6 billion ($191 million) recorded in Q3 FY10, significantly on account of non-cash write-down of intangible assets, ‘beta’ brand and goodwill of betapharm.
  • Adjusted EBITDA at Rs. 15.8 billion ($352 million) in FY10 or a year-on-year growth of 4%. Adjusted EBITDA for Q4 FY10 is at Rs. 3.5 billion ($78 million).
  • Adjusted Net Profit after Tax for FY10 is at Rs. 9.2 billion ($205 million) or a year-on-year growth of 10%. Adjusted Net Profit after Tax for Q4 FY10 is at Rs. 1.9 billion ($43 million).
  • The Company met its guidance on RoCE with an adjusted RoCE at 17% for FY10.
  • During the year, the company launched 103 new generic products, filed 121 new product registrations and filed 36 DMFs globally.

*Note: Adjusted PAT represents PAT adjusted for impact of one-time charges for non-cash impairment charge of Rs. 8.6 billion ($191 million) recorded in Q3 FY10, betapharm workforce restructure costs of Rs. 496 million ($11 million) recorded in Q1 FY10 & Rs. 409 million ($9 million) recorded in Q4 FY10.
Similarly, adjusted EBITDA represents EBITDA adjusted for the above-mentioned betapharm workforce restructure costs.

 All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs 44.95

Dr. Reddy's Laboratories Ltd. and Subsidiaries

Unaudited Consolidated Income Statement

  FY 10   FY 09    
Particulars ($) (Rs.) % ($) (Rs.) (%) Growth %
Revenue 1,563 70,277 100 1,545 69,441 100 1
Cost of revenues 755 33,937 48 733 32,941 47 3
Gross Profit 808 36,340 52 812 36,500 53 (0)
Operating Expenses              
Selling, General &
Administrative Expenses(a) 		501 22,505 32 468 21,020 30 7
Research & Development Expenses, net 84 3,793 5 90 4,037 6 (6)
Write down of intangible assets 77 3,456 5 70 3,167 5 9
Write down of goodwill 115 5,147 7 242 10,856 16 (53)
Other (income)/expenses, net (13) (569) (1) 6 252 0  
Total Operating Expenses 764 34,332 49 875 39,332 57 (13)
Results from operating activities
 45 2,008 3 (63) (2,832) (4)  
Finance Income(b) (8) (369) (1) (11) (485) (1) (24)
Finance expenses(c) 8 372 1 37 1,672 2 (78)
Finance expenses, net 0 3 0 26 1,187 2 (100)
Share of profit/ (loss) of equity accounted investees 1 48 0 1 24 0 100
Profit before income tax 46 2,053 3 (89) (3,995) (6)  
Income tax expense (22) (985) (1) (26) (1,173) (2) 16
Profit for the period 24 1,068 2 (115) (5,168) (7)  
Attributable to:              
Equity holders of the company 24 1,068 2 (115) (5,168) (7)  
Minority interest 0 0 0 0 0 0  
Profit for the period 24 1,068 2 (115) (5,168) (7)  

 

               
Diluted EPS 0.1 6.3     (0.7) (30.7)  
               


Notes:  
(a)
Includes amortization charges of Rs. 1,479 million ($33 million) in FY10 and Rs. 1,503 million ($33 million) in FY09.
(b)
Includes forex gain of Rs. 72 million ($2 million) in FY10.
(c)
 Includes forex loss of Rs. 634 million ($14 million) in FY09.

SEGMENTAL ANALYSIS

Global Generics

Revenues from Global Generics segment are at Rs. 48.6 billion ($1.1 billion) in FY10 represents a marginal decline of 2% over previous year. Excluding the revenues from authorized generic sales of sumatriptan, the growth is at 8%, which is driven largely by the Branded Generics markets. Revenues for Q4 FY10 are at Rs. 11.2 billion ($248 million).

    • Revenues from North America at Rs. 16.8 billion ($374 million) in FY10 as against Rs. 19.8 billion ($441 million) in FY09. Excluding the revenues from authorized generic sales of sumatriptan the growth is at 13%. Revenues for Q4 FY10 at Rs. 3.5 billion ($79 million).
      • The total cumulative ANDA filings are 158. 73 ANDAs are pending approval at the USFDA of which 38 are Para IVs and 12 are FTFs.
    • Revenues from Europe at Rs. 9.6 billion ($215 million) in FY10 versus Rs. 11.9 billion ($264 million) in FY09, or a decline of 19%. Revenues for Q4 FY10 at Rs. 2.1 billion ($47 million).
      • Revenues from Germany decrease by 26% to Rs. 7.3 billion ($162 million) in FY10.
      • Revenues from Rest of Europe grew by 17% to Rs. 2.3 billion ($52 million) in FY10 largely led by the 14% growth in UK.
    • Revenues from Russia & Other CIS markets at Rs. 9.1 billion ($203 million) in FY10 versus Rs. 7.6 billion ($170 million) in FY09, or a growth of 20%. Revenues for Q4 FY10 at Rs. 2.1 billion ($47 million).
      • Revenues in Russia at Rs. 7.2 billion ($161 million) in FY10 versus Rs. 5.8 billion ($129 million) in FY09 or a year-on-year growth of 25%.
        • Dr. Reddy’s year-on-year secondary prescription sales growth stands at 21% versus industry’s growth of 8%. (Source: Pharmexpert MAT March 2010)
      • Revenues in Other CIS markets increase by 4% to Rs. 1.9 billion ($42 million) in FY10 versus Rs. 1.8 billion ($41 million) in FY09.
    • Revenues in India at Rs. 10.2 billion ($226 million) in FY10 versus Rs. 8.5 billion ($189 million) in FY09, or a growth of 20% led by volume growth across products and new product launches. Revenues for Q4 FY10 at Rs. 2.6 billion ($58 million).
      • Dr. Reddy’s year-on-year secondary prescription sales growth of 23% versus industry’s growth of 18%. (Source: ORG IMS MAT March 2010)
      • 62 new products launched during the year contributing to 5% of sales.

Pharmaceutical Services and Active Ingredients

Revenues from PSAI are at Rs. 20.4 billion ($454 million) in FY10 represent a growth of 9%. Revenues for Q4 FY10 are at Rs. 4.9 billion ($110 million).

    • During the year, 36 DMFs were filed globally, with 19 in US, 5 in Canada, 8 in Europe and 4 in RoW. The cumulative DMF filings as of Mar 10 are 375.

Income Statement Highlights:

  • Gross profit at Rs. 36.3 billion ($808 million) in FY10 or a margin of 52% to revenues versus 53% in FY09. This change in gross margins is largely on account of a favorable mix of high margin revenues from sumatriptan in the previous year.
  • Selling, General & Administration (SG&A) expenses excluding amortization for the year at Rs. 21.0 billion ($468 million) grew by 8% over the previous year. Excluding the one-time charges recorded on account of betapharm workforce restructure costs of Rs. 905 million ($20 million), closure of Charlotte & Atlanta facility of Rs. 160 million ($4 million), the SG&A marginally grew by 2%.
  • Amortization expenses for the year at Rs. 1,479 million ($33 million) remain flat as compared to the previous year.
  • Other Operating Income of Rs. 569 million ($13 million) in FY10 versus Other Operating Expenses of Rs. 252 million in FY09. The movement is largely on account of Rs. 916 million of damages recorded in FY09 on account of the German court upholding the validity of the olanzapine patent of the innovator in Germany.
  • R&D expenses at Rs. 3.8 billion ($84 million) in FY10 or a 6% reduction as compared to the previous year.
  • Finance costs (net) are at Rs. 3 million in FY10 versus Rs. 1.2 billion ($26 million) in FY09. The change is mainly on account of :
    • Net forex gain of Rs. 72 million ($2 million) in FY10 versus net forex loss of Rs. 634 million ($14 million) in FY09.
    • Net interest expense of Rs. 123 million ($3 million) in FY10 versus Rs. 689 million ($15 million) in FY09.
  • Adjusted EBITDA at Rs. 15.8 billion ($352 million) in FY10 or a year-on-year growth of 4%. Adjusted EBITDA for Q4 FY10 is at Rs. 3.5 billion ($78 million).
  • Adjusted Net Profit after Tax for FY10 is at Rs. 9.2 billion ($205 million) or a year-on-year growth of 10%. Adjusted Net Profit after Tax for Q4 FY10 is at Rs. 1.9 billion ($43 million).
  • The effective tax rate for the year is at 20%.
  • Adjusted diluted EPS is at Rs. 54.3 ($1.2) for the year.
  • Capital expenditure for FY10 is at Rs. 4.2 billion ($93 million).
(In millions)Key Balance Sheet Items
Particulars As on 31st Mar 10 As on 31st Mar 09
($) (Rs.) ($) (Rs.)
Cash and cash equivalents 146 6,584 124 5,596
Trade and other receivables 266 11,960 325 14,592
Inventories 297 13,371 294 13,226
Property, plant and equipment 500 22,459 465 20,882
Goodwill and Other Intangible assets 311 13,973 493 22,179
Loans and borrowings (current & non-current) 327 14,695 438 19,701
Trade accounts payable 148 6,642 133 5,987
Equity 955 42,915 935 42,045

 

(In millions)FY10 Revenue Mix by Segment
  FY10 as a % FY09 as a % Growth %
$ INR $ INR
Global Generics 1,081 48,605 69 1,108 49,790 72 (2)
North America 374 16,817 35 441 19,843 40 (15)
Europe 215 9,643 20 264 11,886 24 (19)
India 226 10,158 21 189 8,478 17 20
Russia & Other CIS 203 9,119 19 170 7,623 15 20
RoW 64 2,868 6 44 1,959 4 46
PSAI 454 20,404 29 417 18,758 27 9
North America 82 3,672 18 86 3,875 21 (5)
Europe 148 6,653 33 137 6,160 33 8
India 59 2,646 13 53 2,383 13 11
RoW 165 7,433 36 141 6,340 34 17
Others 28 1,267 2 20 893 1 42
Total 1,563 70,276 100 1,545 69,441 100 1

 

(In millions)FY10 Revenue Mix by Geography
  FY10 as a % FY09 as a % Growth %
$ INR $ INR
North America 473 21,268 30 537 24,140 35 (12)
Europe 373 16,779 24 412 18,518 27 (9)
India 285 12,808 18 242 10,861 16 18
Russia & Other CIS 203 9,119 13 170 7,623 11 20
Others 229 10,302 15 185 8,299 12 24
Total 1,563 70,276 100 1,545 69,441 100 1


All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs 44.95

Dr. Reddy’s Laboratories Limited and Subsidiaries
Q4 FY10 Consolidated Income Statement

  Q4 FY 10   Q4 FY 09    
Particulars ($) (Rs.) % ($) (Rs.) (%) Growth %
Revenues 365 16,424 100 442 19,851 100 (17)
Cost of revenues 173 7,784 47 202 9,081 46 (14)
Gross Profit 192 8,640 53 240 10,770 54 (20)
Operating Expenses              
Selling, General &
Administrative Expenses		 129 5,811 35 117 5,267 27 10
Research and development expenses, net 21 953 6 25 1,135 6 (16)
Write down of intangible assets 0 0 0 70 3,167 16  
Write down of goodwill 0 0 0 242 10,856 55  
Other (income)/ expenses, net (5) (238) (1) (4) (187) (1) 27
Total Operating Expenses
 145 6,526 40 450 20,239 102 (68)
Results from Operating activities 47 2,114 13 (211) (9,468) (48)  
Finance income 1 59 0 0 17 0 254
Finance expenses (1) (33) (0) 1 66 0  
Finance expenses, net 1 26 0 2 83 0 (69)
Share of profit/ (loss) of equity accounted investees 0 20 0 0 14 0 43
Profit before income tax 47 2,108 13 (212) (9,537) (48)  
Income tax expense (10) (441) (3) (5) (240) (1) 84
Profit for the period 37 1,667 10 (218) (9,777) (49)  
Attributable to:              
Equity holders of the company 37 1,667 10 (218) (9,777) (49)  
Minority interest 0 0 0 0 0 0  
Profit for the period 37 1,667 10 (218) (9,777) (49)  

Diluted EPS 0.2 9.8   (1.3) (58.1)  


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:

Kedar Upadhye at kedaru@drreddys.com or on +91-40-66834297
Milan Kalawadia (North America) at mkalawadia@drreddys.com or on +1-9082034931
Raghavender R at raghavenderr@drreddys.com or on +91-40-66511529

Media

Rajan S at rajans@drreddys.com or on +91-40-66511725

Notes

1. All the above analyses are based on consolidated IFRS financials.
2. Detailed analysis of the financials is available on the Company’s website at www.drreddys.com