DR. REDDY'S LABORATORIES LTDs Q1 FY20 Financial Results

 

DR. REDDY'S LABORATORIES LTDs Q1 FY20 Financial Results

8-2-337, Road No. 3, Banjara Hills, 

Hyderabad - 500034. Telangana, India. CONTACT

INVESTOR RELATIONS MEDIA RELATIONS

AMIT AGARWALamita@drreddys.com

(Ph: +91-40-4900 2135) MITALI SARKARmitali.sarkar@drreddys.com

(Ph: +91-40-49002121)

Dr. Reddy’s Q1 FY20 Financial Results

Hyderabad, India, July29, 2019: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE:DRREDDY | NYSE: RDY) today 

announced its consolidated financial results for the quarter ended June30, 2019 under International 

Financial Reporting Standards (IFRS).

Commenting on the results, CEO and Co-chairman, GV Prasad said “This quarter, we grew in most of our key 

markets and hope to continue this momentum with a sharper focus on performance. We will continue  our 

journey of operational excellence,  cost leadership and  innovation across our businesses”.

 

All amounts in millions, except EPS                                          All US dollar amounts based on 

convenience translation rate of I USD = Rs.68.92

Dr. Reddy’s Laboratories Limited and Subsidiaries

 Consolidated Income Statement

 Particulars Q1 FY20 Q1 FY19 YoY 

Gr % Q4 FY19 QoQ

Gr%

($) (Rs.) ($) (Rs.) ($) (Rs.)

Revenues 558 38,435 540 37,207 3 583 40,166 (4)

Cost of Revenues 270 18,576 239 16,479 13 277 19,113 (3)

Gross Profit 288 19,859 301 20,728 (4) 305 21,053 (6)

Operating Expenses  

Selling, General & Administrative expenses 175 12,065 176 12,106 (0) 180 12,376 (3)

Research and Development expenses 52 3,609 60 4,157 (13) 53 3,662 (1)

Other operating (income) (55) (3,759) (4) (303) 1141 (5) (330) 1038 

Results from operating activities 115 7,944 69 4,768 67 78 5,345 49 

Net finance (income) (6) (393) (2) (156) 152 (5) (349) 13 

Share of (profit) / loss of equity accounted investees (2) (163) (1) (83) 96 (2)

(157) 4 

Profit before income tax 123 8,500 73 5,007 70 85 5,851 45 

Income tax expense 27 1,872 6 446 320 22 1,507 24 

Profit for the period 96 6,628 66 4,561 45 63 4,344 53 

            -                -                -   

Diluted Earnings Per Share (EPS) 0.58 39.91 0.40 27.45 45 0.38 26.16 53 

As % to Revenues Q1 FY20 Q1 FY19 Q4 FY19

Gross Profit 51.7 55.7 52.4

SG&A 31.4 32.5 30.8

R&D 9.4 11.2 9.1

EBITDA 29.5 21.7 22.0

PBT 22.1 13.5 14.6

PAT 17.2 12.3 10.8

EBITDA Computation

Particulars Q1 FY20 Q1 FY19 Q4 FY19

($) (Rs.) ($) (Rs.) ($) (Rs.) 

 Profit before Income Tax 123 8,500 73 5,007 85 5,851

 Interest (income) net* (3) (239) (1) (46) (3) (215)

 Depreciation# 31 2,124 32 2,214 31 2,136

 Amortization# 14 958 13 896 15 1,047

 EBITDA 165 11,343 117 8,071 128 8,819

* Includes income from Investments       # includes impairment charge

 

All amounts in millions, except EPS                                          All US dollar amounts based on 

convenience translation rate of I USD = Rs.68.92

Key Balance Sheet Items

Particulars As on 30th June, 2019 As on 31st March, 2019 As on 30th June, 2018

($) (Rs.) ($) (Rs.) ($) (Rs.) 

Cash and cash equivalents and other investments 413 28,439 371 25,570 247 17,047

Trade receivables (current & non-current) 551 37,961 580 39,982 698 48,095

Inventories 510 35,137 487 33,579 457 31,498

Property, plant and equipment 785 54,083 785 54,088 827 57,020

Goodwill and Other Intangible assets 694 47,821 700 48,269 715 49,289

Loans and borrowings (current & non-current) 499 34,387 557 38,381 787 54,273

Trade payables 215 14,842 211 14,553 215 14,816

Equity 2,121 1,46,208 2,034 1,40,197 1,892 1,30,430

Revenue Mix by Segment

                                                                           Particulars Q1 FY20 Q1 FY19  

YoY

Growth % Q4 FY19 QoQ

Growth % 

(Rs.) (Rs.) (Rs.)

Global Generics 32,982 30,636 8 30,384 9

    North America 16,322 15,903 3 14,957 9

    Europe 2,404 2,016 19 1,912 26

    India 6,960 6,074 15 6,505 7

Emerging Markets 7,296 6,643 10 7,010 4

Pharmaceutical Services and Active Ingredients (PSAI) 4,539 5,409 (16) 6,765 (33)

Proprietary Products & Others 914 1,162 (21) 3,017 (70)

 Total 38,435 37,207 3 40,166 (4)

 

Segmental Analysis

Global Generics (GG)

Revenues from GG segment at Rs.33.0billion. Year-on-year growth of 8%, primarilydriven by Emerging Markets, 

India and Europe. Sequential growth is 9%.

• Revenues from North America at Rs.16.3billion. Year-on-year growth is 3%.  Sequential growth of 

9%,is driven by contribution from new productsand increase in volumes, partly offset by price erosion 

coupled with adverse foreign exchange movement. We launched five new products (Daptomycin, Testosterone 

gel, Tobramycin, Vitamin K & OTC calcium carbonate) and re-launched Isotretinoin during the quarter. 

As of 30th June 2019, cumulatively 107 generic filings are pending for approval with the USFDA (104 ANDAs 

and 3 NDAs under 505(b)(2) route). Of these 104 ANDAs, 58 are Para IVs out of which we believe 34 have 

‘First to File’ status.

• Revenues from Emerging Markets at Rs.7.3billion. Year-on-year growth is 10%.  Sequential growth is 

4%. 

- Revenues from Russia at Rs.4.0billion. Year-on-year growth of 5%. Growth primarily driven by new 

launches and better realizations in some of the key molecules.

- Revenues from other CIS countries and Romania market at Rs.1.2billion. Year-on-year growth of 2%.

- Revenues from Rest of World (RoW) territories at Rs.2.1billion.Year-on-year growthof 27%, primarily 

driven by new products, traction in new markets and volume traction in base business.

• Revenues from India atRs.7.0billion. Year-on-year growth of 15%, driven by volume traction and 

improved realizations in base business and new product launches. Sequential growth is 7%.

• Revenues from Europe at Rs.2.4billion. Year-on-year growth of 19%, primarily on account of new 

products and volume traction on account of improvement in supplies. Sequential growth is 26%.

Pharmaceutical Services and Active Ingredients (PSAI)

• Revenues from PSAI at Rs.4.5billion.Year-on-year decline of 16% and sequential decline is 33% due 

to decline in the sales volume of certain products.

Proprietary Products (PP)

• Revenues from PP at Rs.281million. Year-on-year decline of 61% due to absence of the derma products 

sales (which were divested in the previous year). 

 

Income Statement Highlights:

• Gross profit margin at 51.7%. 

- declined by ~70 bps sequentially and ~400 bps over that of previous year

- sequentially – excluding the impact of one-time out licensing income of Rs.1.8 billion realized 

from the sale of derma brands, the gross margins have witnessed improvement of 150 bps on a sequential 

basis

- YoY impacted by price erosiondue to increased competitive intensity in some of our key molecules in 

the USand Europe, and lower sales from PSAI business

- Gross profit margin for GG and PSAI business segments are at 57.6% and 7.2% respectively. 

• SG&A expenses at Rs.12.1billion, remained flat on a year-on-year basis and declined by 3% 

sequentially.

• R&D expenses at Rs.3.6billion. As % to Revenues- Q1 FY20: 9.4% | Q4 FY 19: 9.1% | Q1 FY19: 11.2%. 

Focus continues on building complex generics, bio-similars and differentiated products pipeline.

• Other operating income at Rs.3.8 billion; includes Rs.3.5 billion received from Celgene pursuant to 

an agreement entered towardssettlement of any claim the Company or its affiliates may have had for damages 

under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the 

Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health 

Canada.

• Net Finance income at Rs.393million compared to Rs.156 million in Q1FY19. The increaseis primarily 

on account of higher profit on sales of investmentsby Rs.202 million during the quarter.

• Profit after Tax at Rs.6.6billion. The effective tax rate is around 22% for the quarter. 

• Diluted earnings per share is at Rs.39.91

• Capital expenditure is at Rs.1.1 billion.

Organizational Update:

With effectfrom August 1, 2019, Erez Israeli will be elevated as Chief Executive Officer (CEO) of           

  Dr. Reddy’s Laboratories Limited. GV Prasad will continue as the Co-Chairman and Managing Director and 

Erez Israeli will continue to report to him. 

Since joining Dr. Reddy’s as Chief Operating Officer (COO) in April 2018, Erez has spear-headed the 

transformation agenda of the organization by ensuring clear focus and strategy, setting foundations for a 

sustainable financial growth and leading business delivery.His appointment will help to propel the 

organization’s growth agenda forward.

 

Earnings Call Details (06:30 pm IST, 09:00 am EDT, July 29, 2019)

The Company will host an earnings call to discuss the performance and answer any questions from 

participants.

Audio conference Participants can dial-in on the numbers below:

Universal Access Number: +91 22 6280 1219

Secondary number: +91 22 7115 8120

Local Access number:                                                  +91 70456 71221

(Available all over India)

International Toll Free Number USA 18667462133

UK 08081011573

Singapore 8001012045

Hong Kong 800964448

Playback of call: +91 22 7194 5757, +91 22 6663 5757

Conference ID: 20718

Transcript of the event will be available at www.drreddys.com. Playback will be available for a few days.

About Dr. Reddy’s:Dr. Reddy’s Laboratories Ltd. (BSE: 500124, NSE: DRREDDY, NYSE: RDY) is an integrated 

pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. 

Through its three businesses - Pharmaceutical Services & Active Ingredients, Global Generics and 

Proprietary Products – Dr. Reddy’s offers a portfolio of products and services including APIs, custom 

pharmaceutical services, generics, biosimilars and differentiated formulations. Our major therapeutic areas 

of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. 

Reddy’s operates in markets across the globe. Our major markets include – USA, India, Russia & CIS 

countries, and Europe. For more information, log on to: www.drreddys.com

………………………………………………………………………………………………………………………………………………………..…………………………..…

Disclaimer:This press release may include statements of future expectations and other forward-looking 

statements that are based on the management’s current views and assumptions and involve known or unknown 

risks and uncertainties that could cause actual results, performance or events to differ materially from 

those expressed or implied in such statements. In addition to statements which are forward-looking by 

reason of context, the words "may", "will", "should", "expects", "plans", "intends", "anticipates", 

"believes", "estimates", "predicts", "potential", or "continue" and similar expressions identify forward-

looking statements. Actual results, performance or events may differ materially from those in such 

statements due to  without limitation, (i) general economic conditions such as performance of financial 

markets, credit defaults , currency exchange rates , interest rates , persistency levels and frequency / 

severity of insured loss events (ii) mortality and morbidity levels and trends, (iii) changing levels of 

competition and general competitive factors, (iv) changes in laws and regulations and in the policies of 

central banks and/or governments, (v) the impact of acquisitions or reorganisation , including related 

integration issues.

The company assumes no obligation to update any information contained herein.