Dr Reddy Laboratories : . Reddy’s Q3 and 9M FY16 Financial Results

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Press Release

CONTACT
INVESTOR RELATIONS	MEDIA RELATIONS
KEDAR UPADHYE kedaru@drreddys.com(Ph: +91-40-66834297)	CALVIN PRINTER calvinprinter@drreddys.com(Ph: +91-40- 49002121)

DR. REDDY'S LABORATORIES LTD.

Commenting on the company's third quarter results, Co-chairman and CEO, G V Prasad said "Despite multiple challenges we have had a satisfactory quarter in terms of our financial performance. All of our key markets continue to perform well and show healthy growth. However, our performance has been impacted due to adverse macro-economic conditions across key emerging market territories. The two approvals and one tentative approval of our NDAs in the very first review cycle has been a positive development and lays the foundation for building a strong and sustainable proprietary products business. Enhancing our quality management practices and meeting the US FDA expectations continues to be our highest priority."

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = `66.19

Dr. Reddy's Laboratories Limited and Subsidiaries

Consolidated Income Statement

Particulars	Q3 FY 16			Q3 FY 15			Growth %
	($)	(Rs.)	%	($)	(Rs.)	%
Revenues	599	39,679	100.0	581	38,431	100.0	3
Cost of revenues	243	16,089	40.5	243	16,079	41.8	0
Gross profit	356	23,590	59.5	338	22,352	58.2	6
Operating Expenses	182	12,039	30.3	168	11,151	29.0	8
Selling, general & administrative expenses
Research and development expenses	62	4,095	10.3	65	4,316	11.2	(5)
Other operating expense / (income)	(2)	(122)	(0.3)	(5)	(341)	(0.9)	(64)
Results from operating activities	114	7,578	19.1	109	7,226	18.8	5
Finance expense / (income), net	1	62	0.2	(15)	(1,013)	(2.6)	NA
Share of profit of equity accounted investees, net of income tax	(1)	(64)	(0.2)	(1)	(47)	(0.1)	38
Profit before income tax	115	7,580	19.1	125	8,286	21.6	(9)
Income tax expense	27	1,788	4.5	38	2,541	6.6	(30)
Profit for the period	88	5,792	14.6	87	5,745	15.0	1

Diluted EPS

0.51

33.86

0.51

33.61

1

EBITDA Computation

Particulars	Q3 FY 16		Q3 FY 15
	($)	(Rs.)	($)	(Rs.)
Profit before tax	115	7,580	125	8,286
Interest (income) / expense net*	(4)	(236)	(5)	(347)
Depreciation	25	1,685	22	1,462
Amortization	13	892	9	579
Impairment	3	194	8	534
EBITDA	153	10,115	159	10,515
EBITDA (% to sales)	25.5	27.4

* Includes income from investments

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = `66.19

Key Balance Sheet Items

Particulars	As on 31stDec 15		As on 30thSep 15
	($)	(Rs.)	($)	(Rs.)
Cash and cash equivalents and Other current Investments	575	38,028	514	34,050
Trade receivables	633	41,904	647	42,840
Inventories	403	26,689	410	27,147
Property, plant and equipment	797	52,736	771	51,055
Goodwill and Other Intangible assets	374	24,739	365	24,155
Loans and borrowings (current & non-current)	511	33,801	560	37,072
Trade payables	179	11,833	193	12,766
Equity	1,944	128,681	1,836	121,499

Revenue Mix by Segment

Particulars	Q3 FY 16			Q3 FY 15			Growth %
	($)	(Rs.)	%	($)	(Rs.)	%
Global Generics	507	33,558	84	473	31,335	81	7
North America	19,417	16,462	18
Europe*	1,937	1,702	14
India	5,805	4,328	34
Emerging Markets#	6,399	8,843	(28)
PSAI	77	5,082	13	92	6,112	16	(17)
North America	1,037	894	16
Europe	1,951	2,639	(26)
India	622	948	(34)
Rest of World	1,472	1,631	(10)
Proprietary Products & Others	16	1,039	3	15	984	3	6
Total	599	39,679	100	581	38,431	100	3

* Europe primarily includes Germany, UK and out licensing sales business

# Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets including Venezuela

Note: Effective Q1 FY 16, there was a change in the monitoring of performance of one product from Global Generics to Proprietary Products. Consequently, revenues and related costs of this product for the previous periods have been reclassified to conform to such change.

Segmental Analysis

Global Generics

Revenues from Global Generics segment for Q3 FY16 are at ₹33.6 billion, year-on-year growth of 7%, primarily driven by North America, Europe and India.

• Revenues from North America for Q3 FY16 at ₹19.4 billion, year-on-year growth of 18%. Growth primarily on account of sustained performance of the injectable franchise and market share gains in key molecules

  Four new generics filings in the US during the quarter (3 ANDAs and 1 NDA). Cumulatively, 82 generic filings are pending for approval with the USFDA (79 ANDAs and 3 NDAs under 505(b)(2) route). Of these 79 ANDAs, 52 are Para IVs out of which we believe 18 have 'First to File' status.

• Revenues from Emerging Markets for Q3 FY16 at ₹6.4 billion, year-on-year decline of 28%.

  • Revenues from Russia at ₹3.1 billion, year-on-year decline of 21% primarily on account of depreciation of rouble. In constant currency revenues grew by 5% year-on-year over a high base in previous year

  • Revenues from other CIS countries and Romania market at ₹0.9 billion, year-on-year decline of 17%.

  • Revenues from Rest of World (RoW) territories at ₹2.4 billion, year-on-year decline of 38% primarily on account of calibrated sales in Venezuela.

• Revenues from India for Q3 FY16 at ₹5.8 billion, year-on-year growth of 34%.

  • Continued momentum of mega brands.

    
    

  • Portfolio acquired from UCB well-integrated into our supply chain

    
    

    Normalizing for contribution from the UCB portfolio, growth of the base business during the quarter is healthy and in line with expectations

• Revenues from Europe for Q3 FY16 at ₹1.9 billion, year-on-year growth of 14%. Growth was primarily driven by aripiprazole and pregabalin.

  Pharmaceutical Services and Active Ingredients (PSAI)

  
  

• Revenues from PSAI at ₹5.1 billion, and declined by 17% year-on-year.

• During the quarter, 21 DMFs were filed globally and 3 in the US. The cumulative number of DMF filings as of December 31, 2015 was 774.