Close
Hyderabad, India, October 25, 2011  
 


Dr. Reddy’s Q2 FY12 Financial Results : Q2 FY12 Revenues at ₹22.7 billion ($462 million), YoY growth of 21%; Q2 FY12 Adjusted* EBITDA at ₹5.1 billion ($104 million), YoY growth of 20%; Q2 FY12 Adjusted** PAT at ₹3.1 billion ($63 million), YoY growth of 8%

Hyderabad, India, October 25, 2011: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended September 30, 2011 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Consolidated revenues are at ₹22.7 billion ($462 million) in Q2 FY12 versus ₹18.7 billion ($381 million) in Q2 FY11, year-on-year growth of 21%. Consolidated revenues for H1 FY12 is at ₹42.5 billion ($866 million).
    • Revenues from Global Generics for Q2 FY12 are at ₹16.1 billion ($329 million). Year-on-year growth of 18% mainly driven by North America and Russia.
    • Revenues from PSAI are at ₹5.9 billion ($121 million) in Q2 FY12, growth of 28% over previous year.
  • Adjusted* EBITDA of ₹5.1 billion ($104 million) in Q2 FY12, is at 23% of revenues recording year-on-year growth of 20%. Consolidated adjusted EBITDA for H1 FY12 is at ₹9.4 billion ($193 million).
  • Adjusted** Profit after Tax for Q2 FY12 is at ₹3.1 billion ($63 million), is at 14% of revenues with year-on-year growth of 8%. Consolidated adjusted PAT for H1 FY12 is at ₹5.6 billion ($115 million).
  • During the quarter, the company launched 28 new generic products, filed 17 new product registrations and filed 11 DMFs globally.
  • Dr. Reddy’s today announced the final approval of its olanzapine 20 mg tablets, the generic version of Eli Lilly’s Zyprexa® from the USFDA.

*Note: Adjustments include: benefit from a part reversal of provision booked in Q1 for Voluntary Retirement Scheme (VRS) floated by the company.

**Note: Adjustments include: a) interest on bonus debentures and b) benefit from a part reversal of provision booked in Q1 on account of Voluntary Retirement Scheme (VRS) floated by the company.


 All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = ₹49.05

Dr. Reddy's Laboratories Limited and Subsidiaries

Unaudited Consolidated Income Statement

Particulars Q2 FY12 Q2 FY11 Growth %
($) (₹) % ($) (₹) (%)
Revenue 462 22,679 100 381 18,704 100 21
Cost of revenues 214 10,473 46 178 8,718 47 20
Gross profit 249 12,206 54 204 9,986 53 22
Operating Expenses              
Selling, general & administrative expenses 147 7,216 32 116 5,709 31 26
Research and development expenses 30 1,459 6 26 1,270 7 15
Other operating (income) / expense (4) (215) (1) (4) (218) (1) (2)
Results from operating activities 76 3,745 17 66 3,225 17 16
Net finance (income) / expense 1 50 0 1 35 0 42
Share of (profit) / loss of equity accounted investees (0) (13) (0) (0) (3) (0) -
Profit / (loss) before income tax 76 3,709 16 65 3,194 17 16
Income tax (benefit) / expense 13 631 3 7 327 2 93
Profit / (loss) for the period 63 3,078 14 58 2,867 15 7

Diluted EPS 0.4 18.1   0.3 16.9    

Profit Reconciliation:

Adjusted EBITDA Reconciliation Q2 FY12 Q2 FY11
($) (₹) ($) (₹)
PBT 76 3,709 65 3,194
Interest 5 225 0 6
Depreciation 18 879 15 731
Amortization 8 389 6 317
EBITDA 106 5,203 87 4,248
Adjustments:        
Part reversal of provision booked in Q1 for Voluntary Retirement Scheme (2) (94)    
Adjusted EBITDA 104 5,109 87 4,248

Adjusted PAT Reconciliation Q2 FY12 Q2 FY11
($) (₹) ($) (₹)
PAT 63 3,078 58 2,867
Adjustments:        
Interest on Bonus Debentures 2 118    
Part reversal of provision booked in Q1 for Voluntary Retirement Scheme (2) (94)    
Tax normalizing adjustment (0) (4)    
Adjusted PAT 63 3,099 58 2,867

Segmental Analysis

Global Generics

Revenues from Global Generics segment are at ₹16.1 billion ($329 million) in Q2 FY12 registering growth of 18% over previous year.

  • Revenues from North America at ₹6.3 billion in Q2 FY12 versus ₹4.4 billion in Q2 FY11. Growth in USD terms of 45% was led by new product launches in the last twelve months and market share improvement in key products.
    • 5 new products launched during the quarter, including limited competition products such as fondaparinux and fexofenadine pseudoephedrine D24 OTC.
    • 24 products of our prescription portfolio feature among the Top 3 rank in market share (Source: IMS Sales Volumes July 2011).
    • During the quarter, 4 ANDAs were filed. The cumulative ANDA filings as of 30th September, 2011 are 177. A total of 76 ANDAs are pending for approval with the USFDA of which 40 are Para IVs and 11 are FTFs.
  • Revenues in Russia & Other CIS markets at ₹3.4 billion in Q2 FY12 versus ₹2.8 billion in Q2 FY11, year-on-year growth of 23%.
    • Revenues in Russia at ₹2.9 billion in Q2 FY12 versus ₹2.3 billion in Q2 FY11, year-on-year growth in USD terms of 30%, largely driven by volume growth in key brands.
      • OTC portfolio growth of 33% over previous year; OTC sales at 25% of overall Russia sales.
      • Dr. Reddy’s year-on-year secondary prescription sales growth at 20% versus industry’s growth of 10%. (Source: Pharmexpert August 2011). Dr. Reddy’s is ranked 12th in market share.
    • Revenues in Other CIS markets remained flat at ₹477 million in Q2 FY12.
  • Revenues in India increased by 9% to ₹3.5 billion in Q2 FY12 versus ₹3.2 billion in Q2 FY11.
    • 3 new products launched during the quarter.
    • Biosimilar portfolio growth of 22% over previous year ; represents 6% to sales.
  • Revenues from Europe at ₹2.1 billion in Q2 FY12, declined by 10% over previous year.
    • Revenues from Germany declined by 27% to ₹1.2 billion in Q2 FY12 due to continuing impact of tenders.
    • Revenues from Rest of Europe grew by 26% to ₹933 million in Q2 FY12 driven by new launches in UK and growth in out-licensing business.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI are at ₹5.9 billion in Q2 FY 12 versus ₹4.6 billion in Q2 FY11, year-on-year increase of 28%.
    • Growth in Active Ingredients business led by new product launches in Europe.
    • Pharmaceutical Services business grew on account of improved customer order book status.
    • During the quarter, 11 DMFs were filed globally, with 2 in US, 2 in Europe, 1 in Canada and 6 in rest of the markets. The cumulative DMF filings as of 30th September 2011 are 506.

Income Statement Highlights:

  • Gross profit at ₹12.2 billion ($249 million) in Q2 FY12, margin of 54% to revenues, marginal increase over previous year.
  • Selling, General & Administration (SG&A) expenses including amortization at ₹7.2 billion ($147 million) increased by 26% over Q2 FY11. This increase is on account of a) higher freight costs both on account of increase in sales volumes as well as rate increases, b) inflation and year-on-year increments linked increase in manpower costs across businesses, c) incremental costs at Bristol and Shreveport manufacturing facilities in the US and d) the increase in the OTC-related selling and marketing costs in Russia and other CIS markets as compared to previous year.
  • R&D expenses at ₹1.5 billion ($30 million) in Q2 FY12, increase of 15% over Q2 FY11.
  • Net Finance costs are at ₹50 million ($1 million) in Q2 FY 12 versus ₹35 million ($0.7 million) in Q2 FY11
    The change is on account of :
    • Net forex gain of ₹151 million ($3 million) versus net forex loss of ₹49 million ($1 million) in Q2 FY11.
    • Net interest expense of ₹225 million ($5 million) in Q2 FY12 versus ₹5 million ($0.1 million) in Q2 FY11.
    • Profit on sale of investments of ₹25 million ($0.5 million) in Q2 FY12 versus ₹19 million ($0.4 million) in Q2 FY11.
  • Adjusted EBITDA of ₹5.1 billion ($104 million) in Q2 FY12, is at 23% of revenues with year-on-year growth of 20%.
  • Adjusted Profit after Tax for Q2 FY12 is at ₹3.1 billion ($63 million), is at 14% of revenues with year-on-year growth of 8%.
  • Adjusted EPS for Q2 FY 12 is at ₹18.2 ($0.4) versus ₹16.9 ($0.3) in Q2 FY11.
  • Capital expenditure for H1 FY12 is at ₹3.6 billion ($73 million).

Appendix 1:  Q2 FY12 Key Balance Sheet Items                                                                                      (In millions)

Particulars As on 30th Sep 11 As on 30th Jun 11
($) (₹) ($) (₹)
Cash and cash equivalents 155 7,596 111 5,468
Trade receivables 419 20,568 349 17,136
Inventories 379 18,592 355 17,401
Property, plant and equipment 641 31,450 622 30,524
Goodwill and other intangible assets 308 15,115 304 14,921
Loans and borrowings (current & non-current) 638 31,303 488 23,940
Trade payables 182 8,940 172 8,433
Equity 980 48,081 997 48,902

Appendix 2:  Q2 FY12 Revenue Mix by Segment                                                                                                       (In millions)

  Q2 FY12 Q2 FY 11 Growth %
($) (₹) as a % ($) (₹) as a %
Global Generics 329 16,136 71 279 13,667 73 18
North America   6,287 39   4,416 32 42
Europe   2,117 13   2,366 17 (10)
India   3,459 21   3,160 23 9
Russia & Other CIS   3,380 21   2,751 20 23
RoW   893 6   974 7 (8)
PSAI 121 5,933 26 94 4,617 25 28
North America   1,068 18   814 18 31
Europe   2,303 39   1,551 34 48
India   752 13   653 14 15
RoW   1,810 31   1,599 35 13
Others 12 610 3 9 420 2 45
Total 462 22,678 100 381 18,704 100 21

Appendix 3:  Q2 FY12 Revenue Mix by Geography                                                                                                  (In millions)

  Q2 FY12 Q2FY 11 Growth %
($) (₹) as a % ($) (₹) as a %
North America 159 7,777 34 111 5,464 29 42
Europe 92 4,536 20 84 4,102 22 11
India 86 4,210 19 78 3,813 20 10
Russia & Other CIS 69 3,380 15 56 2,751 15 23
Others 57 2,775 12 52 2,573 14 8
Total 462 22,678 100 18,704 18, 100 21

Appendix 4:  H1 FY12 Consolidated Income Statement                                                                                            

 All figures in millions,
except EPS All dollar figures based on convenience translation rate of 1USD = ₹49.05

Particulars H1 FY12 H1 FY11 Growth %
($) (₹) % ($) (₹) (%)
Revenue 866 42,462 100 724 35,535 100 19
Cost of revenues 402 19,701 46 339 16,635 47 18
Gross profit 464 22,761 54 385 18,900 53 20
Operating Expenses              
Selling, general & administrative expenses 285 13,972 33 228 11,191 31 25
Research and development expenses 54 2,656 6 46 2,263 6 17
Other operating (income) / expense (8) (401) (1) (8) (404) (1) (1)
Results from operating activities 133 6,533 15 119 5,850 16 12
Net finance (income) / expense 2 96 0 4 212 1 (55)
Share of (profit) / loss of equity accounted investees (0) (17) (0) (0) (8) (0) 113
Profit / (loss) before income tax 132 6,455 15 115 5,647 16 14
Income tax (benefit) / expense 15 751 2 14 684 2 10
Profit / (loss) for the period 116 5,704 13 101 4,963 14 15

Diluted EPS 0.7 33.6   0.6 29.2    

Appendix 5:  H1 FY12 Profit Reconciliation                                                                                                   (In millions)

Adjusted EBITDA Reconciliation H1 FY12 H1 FY11
($) (₹) ($) (₹)
PBT 132 6,455 115 5,647
Interest 9 446 (0) (3)
Depreciation 35 1,708 29 1,416
Amortization 16 794 12 605
Reported EBITDA 192 9,404 156 7,665
Adjustments:
One-time charge of Voluntary Retirement Scheme 		1 42    
Adjusted EBITDA 193 9,445 156 7,665

Adjusted PAT Reconciliation H1 FY12 H1 FY11
($) (₹) ($) (₹)
Reported PAT 116 5,704 101 4,963
Adjustments:
Interest on Bonus Debentures		 5 236    
One-time charge of Voluntary Retirement Scheme 1 42    
Tax normalizing adjustment (7) (364)    
Adjusted PAT 115 5,618 101 4,963

 

About Dr. Reddy's
Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services and Active Ingredients, Global Generics and Proprietary Products – Dr. Reddy’s offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars, differentiated formulations and NCEs. Therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management, anti-infective and pediatrics. Major markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa, Romania, and New Zealand. For more information, log on to: www.drreddys.com
 
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 +91-40-49002135
Milan Kalawadia (North America) at mkalawadia@drreddys.com or on +1-9082034931

Media
Rajan S at rajans@drreddys.com or on +91-40- 49002445

Note: All discussions in this release are based on unaudited consolidated IFRS financials.