Close
Hyderabad, India, October 23, 2010  
 


Dr. Reddy’s Q2 FY11 Financial Results: Revenue at Rs. 18.7 billion ($420 million); (Growth » 2% YoY & 11% QoQ)
EBITDA at Rs. 4.2 billion ($95 million); (Growth » 12% YoY & 24% QoQ)
Profit after Tax at Rs. 2.9 billion ($64 million); (Growth » 32% YoY & 37% QoQ)

Hyderabad, India, October 23, 2010: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited financial results for the quarter ended September 30, 2010 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Consolidated revenues are at Rs. 18.7 billion ($420 million) in Q2 FY11 versus Rs. 18.4 billion ($412 million) in Q2 FY10, a year-on-year growth of 2%.
    • Revenues from Global Generics for Q2 FY11 are at Rs. 13.7 billion, a year-on-year growth of 8%.
    • Revenues from PSAI are at Rs. 4.6 billion in Q2 FY11, a year-on-year decline of 14%.
  • EBITDA of Rs. 4.2 billion ($95 million) in Q2 FY11, represents 23% to revenues and a year-on-year growth of 12%.
  • Profit before Tax for Q2 FY11 is at Rs. 3.2 billion ($72 million), a year-on-year growth of 15%.
  • Profit after Tax for Q2 FY11 is at Rs. 2.9 billion ($64 million), represents 15% to revenues and a year-on-year growth of 32%.
  • During the quarter, the company launched 41 new generic products, filed 21 new product registrations and filed 13 DMFs globally.

 All figures in millions, except EPS
All $ figures based on convenience translation rate of 1USD = Rs 44.56

Dr. Reddy's Laboratories Limited and Subsidiaries

Unaudited Consolidated Income Statement

Particulars Q2 FY11 Q2 FY 10 Growth %
($) (Rs.) % ($) (Rs.) (%)
Revenue 420 18,704 100 412 18,368 100 2
Cost of revenues 196 8,719 47 217 9,649 53 (10)
Gross profit 224 9,986 53 196 8,719 47 15
Operating Expenses              
Selling, general & Administrative Expenses(a) 128 5,709 31 120 5,336 29 7
Research & development expenses, net 29 1270 7 22 963 5 32
Other (income)/ expenses, net (5) (218) (1) (3) (125) (1) 74
Total Operating Expenses 152 6,761 36 139 6,174 34 10
Results from operating activities 72 3,225 17 57 2,545 14 27
Finance income(b) (1) (56) (0) (7) (293) (2) (81)
Finance expenses(c) 2 91 0 2 85 0 7
Finance expenses, net 1 35 0 (5) (208) (1) -
Share of profit/ (loss) of equity accounted investees 0 3 0 0 15 0 (80)
Profit before income tax 72 3,194 17 62 2,768 15 15
Income tax expense (7) (327) (2) (13) (595) (3) (45)
Profit for the period 64 2,867 15 49 2,173 12 32

Diluted EPS 0.4 16.9   0.3 12.8   32


Notes:  
(a)
Includes amortization charge of Rs. 317 million ($7 million) in Q2 FY11 and Rs. 329 million ($7 million) in Q2 FY10.
(b)
Includes forex gain of Rs. 244 million ($5 million) in Q2 FY10.
(c)
Includes forex loss of Rs. 49 million ($1 million) in Q2 FY11.

Segmental Analysis

Global Generics

Revenues from Global Generics segment are at Rs. 13.7 billion in Q2 FY11, a year-on-year growth of 8% driven largely by the contribution from branded generics markets.

  • Revenues from North America at Rs. 4.4 billion in Q2 FY11 versus Rs. 4.3 billion in Q2 FY10, represents a growth of 3% in rupee terms and 7% in USD terms.
    • Sequential growth of 13% was largely led by new products of tacrolimus and amlodipine benazepril.
    • As of September 30, 2010, total cumulative ANDA filings are 167. Total ANDAs pending approval at the USFDA are 74 of which 39 are Para IVs and 12 are FTFs.
  • Revenues from Europe at Rs. 2.4 billion in Q2 FY11 versus Rs. 2.8 billion in Q2 FY10, a year-on-year decline of 17%.
    • Revenues from Germany at Rs. 1.6 billion in Q2 FY11. The decline of 26% in rupee terms or a decline of 14% in Euro terms is largely due to price erosions caused by the impact of tenders.
    • Revenues from Rest of Europe grew by 13% to Rs. 738 million in Q2 FY11.
  • Revenues from Russia & Other CIS markets at Rs. 2.8 billion in Q2 FY11 versus Rs. 2.4 billion in Q2 FY10, or a growth of 17%.
    • Revenues in Russia at Rs. 2.3 billion in Q2 FY11 versus Rs. 1.8 billion in Q2 FY10 or a year-on-year growth of 23% in rupee terms and 28% in roubles.
      • Dr. Reddy’s secondary prescription sales growth stands at 25% (volume growth of 37%) versus industry’s growth of 16% (volume growth of 18%). (Source: Pharmexpert April-August 2010)
    • Revenues in Other CIS markets decrease by 5% to Rs. 480 million in Q2 FY11 versus Rs. 503 million in Q2 FY10.
  • Revenues in India at Rs. 3.2 billion in Q2 FY11 versus Rs. 2.5 billion in Q2 FY10, a growth of 25%, consisting of volume growth of 16% and new products contribution (last 12 month launches) of 9%.
    • 13 new products launched during the quarter.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI are at Rs. 4.6 billion in Q2 FY11 or a year-on-year decline of 14%.
    • During the quarter, 13 DMFs were filed globally. The cumulative DMF filings as of Sep 10 are 390.

Income Statement Highlights:

  • Gross profit at Rs. 10.0 billion ($224 million) in Q2 FY11 at a margin of 53% to revenues versus 47% in Q2 FY10. This change in gross margin is largely on account of :
    • Contribution from new products of tacrolimus and amlodipine benazepril.
    • One time inventory provisions of approximately $12 mn in the Global Generics segment in the corresponding quarter of previous year.
    Gross margins for Global Generics and Pharmaceutical Services and Active Ingredients are at 64% and 22% respectively.
  • Selling, General & Administration (SG&A) expenses including amortization for the quarter, is at Rs. 5.7 billion ($128 million) or an increase of 7% over the previous year. The increased SG&A spend is majorly on account of higher field force in India and Russia and increase of OTC expenditure in our Russia business.
  • R&D expenses at Rs. 1,269 million ($28 million) in Q2 FY11, the increase of 32% is in line with higher R&D activities in the current year.
  • Other Income of Rs. 218 million ($5 million) in Q2 FY11 versus Rs. 125 million ($3 million) in Q2 FY10.
  • Finance costs (net) are at Rs. 33 million ($1 million) in Q2 FY11 versus finance income Rs. 208 million ($5 million) in Q2 FY10. The change is mainly on account of :
    • Net forex loss of Rs. 49 million ($1 million) in Q2 FY11 versus net forex gain of Rs. 244 million ($5 million) in Q2 FY10.
    • Net interest expense of Rs. 6 million ($0.1 million) in Q2 FY11 versus Rs. 42 million ($1 million) in Q2 FY10.
  • EBITDA at Rs. 4.2 billion ($95 million) in Q2 FY11 represents 23% to sales and a year-on-year growth of 12%.
  • Net Profit after Tax for Q2 FY11 is at Rs. 2.9 billion ($64 million).
  • Diluted EPS is at Rs. 16.9 ($0.4) for the quarter.
  • Capital expenditure for the quarter is at Rs. 2.2 billion ($49 million).

 

Appendix 1:  Q2 FY11 Key Balance Sheet Items                                                                                                       (in millions)

Particulars As on 30th Sep 10 As on 30th Jun 10
($) (Rs.) ($) (Rs.)
Cash and cash equivalents 139 6,196 143 6,366
Trade receivables 300 13,376 287 12,769
Inventories 331 14,728 324 14,451
Property, plant and equipment 570 25,412 537 23,940
Goodwill and other intangible assets 303 13,511 298 13,287
Loans and borrowings (current & non-current) 325 14,493 311 13,872
Trade payables 222 9,907 217 9,689
Equity & Reserves 1,015 45,245 1009 44,966

Appendix 2:  Q2 FY11 Revenue Mix by Segment                                                                                                 (in Rs. millions)

  Q2 FY11 as a % Q2 FY 10 as a % Growth %
Global Generics 13,667 73 12,706 69 8
North America 4,416 32 4,285 34 3
Europe 2,366 17 2,848 22 (17)
India 3,160 23 2,521 20 25
Russia & Other CIS 2,751 20 2,351 19 17
RoW 974 7 701 6 39
PSAI 4,617 25 5,375 29 (14)
North America 814 18 1150 21 (29)
Europe 1,551 34 1,761 33 (12)
India 653 14 629 12 4
RoW 1,599 35 1,835 34 (13)
Proprietary Products & Others 420 2 287 2 46
Total 18,704 100 18,368 100 2

Appendix 3:  Q2 FY11 Revenue Mix by Geography                                                                                             (in Rs. millions)

  Q2 FY11 as a % Q2 FY 10 as a % Growth %
North America 5,464 29 5,588 30 (2)
Europe 4,102 22 4,743 26 (14)
India 3,813 20 3,150 17 21
Russia & Other CIS 2,751 15 2,351 13 17
Others 2,573 14 2,536 14 1
Total 18,704 100 18,368 100 2

 

About Dr. Reddy's
Established in 1984, Dr. Reddy’s Laboratories (NYSE: RDY) is an emerging global pharmaceutical company. We fulfill our purpose of providing affordable and innovative medicines through three core businesses: Pharmaceutical Services & Active Ingredients, Global Generics and Proprietary Products.
 
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
Raghavender R at raghavenderr@drreddys.com or on +91-40-66511529
Milan Kalawadia (North America) at mkalawadia@drreddys.com or on +1-9082034931

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