Dr. Reddy’s Q3 FY12 Financial Results

Highest ever quarterly sales and profit

HYDERABAD, India--()--Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended December 31, 2011 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Launch of olanzapine 20 mg (generic version of Eli Lilly’s Zyprexa® 20 mg) in the US, another key milestone in consistently delivering limited competition opportunities
  • Revenues for Q3 FY12 at Rs 27.7 billion ($522 million), YoY growth of 46%
    • Revenues for nine months FY12 at Rs 70.2 billion ($1.3 billion), YoY growth of 29%
  • EBITDA for Q3 FY12 at Rs 9.2 billion ($174 million), 33% to sales, YoY growth of 127%
    • EBITDA for nine months FY12 at Rs 18.6 billion ($351 million), 27% to sales, YoY growth of 59%
  • Adjusted* PAT for Q3 FY12 at Rs 5.2 billion ($98 million), YoY growth of 91%
    • Adjusted* PAT for nine months FY12 at Rs 11.1 billion ($209 million), YoY growth of 44%
  • Q3 FY12 - 33 new generic launches, 16 new generic filings and 7 DMF filings

*Note: Adjustments on account of interest on bonus debentures (net of tax)

All figures in millions, except EPS

 

All US dollar figures based on convenience translation rate of 1USD = Rs 53.01

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

Unaudited Consolidated Income Statement
   
Particulars Q3 FY12 Q3 FY11  
($)   (Rs)   %   ($)   (Rs)   %   Growth %
Revenue 522 27,692 100 358 18,985 100 46
Cost of revenues 210   11,117   40   162   8,571   45   30  
Gross profit 313   16,575   60   196   10,414   55   59  
Operating Expenses
Selling, general & administrative expenses 145 7,679 28 120 6,374 34 20
Research and development expenses 29 1,514 5 25 1,306 7 16
Other operating (income) / expense (3 ) (165 ) (1 ) (4 ) (199 ) (1 ) (17 )
Results from operating activities 142   7,547   27   55   2,933   15   157  
Net finance (income) / expense (3 ) (174 ) (1 ) 1 48 0 -
Share of (profit) / loss of equity accounted investees (0 ) (26 ) (0 ) 0   1   0   -  
Profit / (loss) before income tax 146   7,747   28   54   2,884   15   169  
Income tax (benefit) / expense 49   2,616   9   3   152   1   -  
Profit / (loss) for the period 97   5,131   19   52   2,732   14   88  
               
Diluted EPS 0.6   30.2     0.3   16.1     88  
 

Profit Computation

   

(in millions)

EBITDA Computation Q3 FY12     Q3 FY11
($)    

(Rs)

($)    

(Rs)

PBT (reported) 146 7,747 54 2,884
Interest 3 155 2 98
Depreciation 17 899 14 758
Amortization 8   408 6   307
EBITDA 174   9,208 76   4,048
 

(in millions)

Adjusted PAT Computation Q3 FY12 Q3 FY11
($)

(Rs)

($)

(Rs)

PAT (reported) 97 5,131 52 2,732
Adjustments:
Interest on Bonus Debentures (net of tax) 1   78    
Adjusted PAT 98   5,209 52   2,732
 

Key Balance Sheet Items

   

(in millions)

Particulars As on 31st Dec 11     As on 30th Sep 11
($)     (Rs) ($)     (Rs)
Cash and cash equivalents 313   16,587 143   7,596
Trade receivables 498   26,373 388   20,568
Inventories 369   19,586 351   18,592
Property, plant and equipment 612   32,433 593   31,450
Goodwill and Other Intangible assets 287   15,182 285   15,115
Loans and borrowings (current & non-current) 727   38,502 591   31,303
Trade payables 173   9,189 169   8,940
Equity 980   51,927 907   48,081
 

Q3 FY12 Revenue Mix by Segment

   

(in millions)

      Q3 FY12 Q3 FY11     Growth %
($)     (Rs)     % ($)     (Rs)     %
Global Generics 402   21,287 77 256   13,589 72 57  
North America   11,114     4,765   133  
Europe   2,426     2,124   14  
India   3,333     3,000   11  
Russia & Other CIS   3,317     2,880   15  
RoW   1,097     820   34  
PSAI 105   5,563 20 94   4,979 26 12  
North America   1,170     770   52  
Europe   1,651     1,830   (10 )
India   862     622   39  
RoW   1,880     1,757   7  
Others 15   842 3 8   417 2 102  
Total 522   27,692 100 358   18,985 100 46  
 

Q3 FY12 Revenue Mix by Geography

   

(in millions)

      Q3 FY12 Q3 FY11    

Growth %

($)     (Rs)     % ($)     (Rs)     %
North America 242   12,826 46 110   5,823 31 120
Europe 82   4,325 16 77   4,078 21 6
India 79   4,194 15 68   3,625 19 16
Russia & Other CIS 63   3,317 12 54   2,880 15 15
Others 56   3,030 11 49   2,579 14 17
Total 522   27,692 100 358   18,985 100 46
 

Segmental Analysis

Global Generics: North America

Revenues from North America were at Rs 11.1 billion in Q3 FY12 versus Rs 4.8 billion in Q3 FY11. Growth was led by the high value launch of olanzapine 20 mg, new products launched in the last twelve months and strong volume growth across key products.

  • 2 new products launched during the quarter – olanzapine 20 mg and olanzapine ODT.
  • Strong volume growth contributed by key products such as lansoprazole, tacrolimus, omeprazole Mg OTC and Shreveport products and last twelve months new launches of fondaparinux and antibiotics portfolio.
  • 26 prescription products feature among the Top 3 in market share (Source: IMS Volumes November 2011).
  • During the quarter, 3 ANDAs were filed. The cumulative ANDA filings as of 31st December, 2011 are 187. A total of 79 ANDAs are pending for approval with the USFDA of which 40 are Para IVs and 10 are FTFs.

Global Generics: Russia & Other CIS

Revenues in Russia & Other CIS markets were at Rs 3.3 billion in Q3 FY12 versus Rs 2.9 billion in Q3 FY11.

  • Revenues in Russia were at Rs 2.8 billion in Q3 FY12.
    • The company’s secondary sales growth at 23% continued to outperform industry’s growth of 19%. (Source: Pharmexpert Prescription Sales November 2011).
    • Top 5 products feature among Top 2 ranks in market share.
    • OTC portfolio grew by 24% over previous year.
  • Revenues in Other CIS markets were at Rs 557 million in Q3 FY12; year-on-year growth driven largely by Ukraine and Kazakhstan.

Global Generics: India

Revenues in India were at Rs 3.3 billion in Q3 FY12 versus Rs 3.0 billion in Q3 FY11, driven by volume increase in key products and new product launches in the last twelve months.

  • 6 new products launched during the quarter.
  • Biosimilars portfolio grew by 25% over previous year.

Global Generics: Europe

Revenues from Europe were at Rs 2.4 billion in Q3 FY12 versus Rs 2.1 billion in Q3 FY11.

  • Revenues from Germany were at Rs 1.5 billion in Q3 FY12. Growth in new product launches outside the scope of tender was offset by price erosion in products within tenders.
  • Revenues from Rest of Europe were at Rs 881 million.

Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI were at Rs 5.6 billion in Q3 FY12 versus Rs 5.0 billion in Q3 FY11. Growth was largely driven by Pharmaceutical Services segment and benefit of rupee depreciation.

  • During the quarter, 7 DMFs were filed globally including 2 in US, 2 in Europe and 3 in rest of the markets. The cumulative DMF filings as of 31st December 2011 are 513 globally.

Income Statement Highlights:

  • Gross profit margin 60% to revenues in Q3 FY12, increased largely on account of a favorable mix of high margin olanzapine revenues and benefit of rupee depreciation.
  • Selling, General & Administration (SG&A) expenses including amortization at Rs 7.7 billion ($145 million) increased by 20% over Q3 FY11. This increase is on account of higher manpower and freight costs and the effect of rupee depreciation against multiple currencies.
  • Net Finance income at Rs 174 million ($3 million) in Q3 FY12 versus net Finance cost of Rs 49 million ($1 million) in Q3 FY11. The change is on account of:
    • Net forex gain of Rs 285 million ($5 million) in Q3 FY12 versus net forex loss of Rs 45 million ($1 million) in Q3 FY11.
    • Net interest expense of Rs 155 million ($3 million) in Q3 FY12 versus Rs 98 million ($2 million) in Q3 FY11.
    • Profit on sale of investments of Rs 44 million ($1 million) in Q3 FY12 versus Rs 4 million in Q3 FY11.
  • EBITDA of Rs 9.2 billion ($174 million) in Q3 FY12, represents 33% of revenues and recorded a year-on-year growth of 127%. EBITDA of Rs 18.6 billion ($351 million) for nine months ended December 2011, represents 27% of revenues and recorded a year-on-year growth of 59%.
  • Profit after Tax adjusted for interest on bonus debentures (net of tax), was at Rs 5.2 billion ($98 million) in Q3 FY12, 19% of revenues and year-on-year growth of 91%. Adjusted PAT for nine months ended December 2011 was Rs 11.1 billion ($209 million) and recorded year-on-year growth of 44%.
  • Adjusted EPS for Q3 FY12 was Rs 30.6 ($0.6) versus Rs 16.1 ($0.3) in Q3 FY11. Adjusted EPS for nine months ended December 2011 was Rs 65.1 ($1.2).
  • Capital expenditure for nine months ended December 2011, was Rs 5.0 billion ($94 million).

Consolidated Income Statement: Nine months ending December 2011

     

All figures in millions, except EPS

All US dollar figures based on convenience translation rate of 1USD = Rs 53.01

 
  9 Months FY12 9 Months FY11  
Particulars ($)   (Rs)   % ($)  

(Rs)

  % Growth %
Revenue 1,323 70,153 100 1,028 54,520 100 29
Cost of revenues 581   30,818   44   475   25,206   46   22  
Gross profit 742   39,335   56   553   29,314   54   34  
Operating Expenses
Selling, general & administrative expenses 409 21,651 31 331 17,562 32 23
Research and development expenses 79 4,170 6 67 3,569 7 17
Other operating (income) / expense (11 ) (567 ) (1 ) (11 ) (602 ) (1 ) (6 )
Results from operating activities 266   14,081   20   166   8,786   16   60  
Net finance (income) / expense (1 ) (78 ) (0 ) 5 262 0 -
Share of (profit) / loss of equity accounted investees (1 ) (43 ) (0 ) (0 ) (7 ) (0 ) 514  
Profit / (loss) before income tax 268   14,202   20   161   8,531   16   66  
Income tax (benefit) / expense 63   3,366   5   16   836   2   303  
Profit / (loss) for the period 204   10,836   15   145   7,695   14   41  
               
Diluted EPS 1.2   63.7     0.9   45.3     41  
 

Profit Computation

   

(in millions)

EBITDA Computation 9 Months FY12     9 Months FY11
($)    

(Rs)

($)    

(Rs)

PBT (reported) 268 14,202 161 8,531
Interest 11 601 2 95
Depreciation 49 2,606 41 2,174
Amortization 23   1,202 17   912
EBITDA

351

  18,611 221   11,712
 

 

(in millions)

Adjusted PAT Computation

9 Months FY12 9 Months FY11
($)

(Rs)

($)

(Rs)

PAT (reported) 204 10,836 145 7,695
Adjustments:
Interest on Bonus Debentures (net of tax) 5   235    
Adjusted PAT

209

  11,071 145   7,695
 

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 business segments - 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. Focus markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa, Romania, Australia 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.

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

Contacts

Dr. Reddy’s Laboratories Ltd.
Investors and Financial Analysts:
Kedar Upadhye, +91-40-66834297
kedaru@drreddys.com
or
Raghavender R, +91-40-49002135
raghavenderr@drreddys.com
or
Milan Kalawadia (North America), +1-9082034931
mkalawadia@drreddys.com
or
Media:
Rajan S, +91-40-49002445
rajans@drreddys.com

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Contacts

Dr. Reddy’s Laboratories Ltd.
Investors and Financial Analysts:
Kedar Upadhye, +91-40-66834297
kedaru@drreddys.com
or
Raghavender R, +91-40-49002135
raghavenderr@drreddys.com
or
Milan Kalawadia (North America), +1-9082034931
mkalawadia@drreddys.com
or
Media:
Rajan S, +91-40-49002445
rajans@drreddys.com