EX-99.1

EX-99.1 2 d158536dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO


	CONTACT
DR. REDDY’S LABORATORIES LTD.	INVESTOR RELATIONS	MEDIA RELATIONS
8-2-337, Road No. 3, Banjara Hills,	KEDAR UPADHYE	CALVIN PRINTER
Hyderabad - 500034. Telangana, India.	kedaru@drreddys.com (Ph: +91-40-66834297)	calvinprinter@drreddys.com (Ph: +91-40- 49002121)

Dr. Reddy’s Q4 and FY16 Financial Results


Q4 Revenues at Rs.37.6 billion		FY16 Revenues at Rs.154.7 billion
(YoY decline of 3%)		(YoY growth of 4%)
Q4 EBITDA at Rs.4.8 billion		FY16 EBITDA at Rs.36.3 billion
(12.8% of the revenues)		(23.4% of the revenues)
*Q4 Adjusted EBITDA at Rs.9.0 billion**		*FY16 Adjusted EBITDA at Rs.41.2 billion**
(24.0% of the revenues)		(26.7% of the revenues)

Hyderabad, India, May 12, 2016: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY | BSE: 500124 | NSE: DRREDDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2016 under International Financial Reporting Standards (IFRS).

FY16: Key Highlights

•

Received two final approvals and one tentative approval of the NDAs filed by the Proprietary Products Business. Zembrace launched in April 2016.

•

Consolidated revenues at Rs.154.7 billion, year-on-year growth of 4%.

•

Gross Profit Margin at 59.6%, improved by ~200 bps over last year.

•

Research & Development (R&D) spend at Rs.17.8 billion. 11.5% of revenues. Continued focus on building complex generics and differentiated products pipeline.

•

EBITDA at Rs.36.3 billion, 23.4% of revenues. Adjusted* EBITDA at 26.7% of revenues, year on year growth of 11%.

•

Profit after tax at Rs.20.0 billion. Diluted EPS at Rs.117.

Q4 FY16: Key Highlights

•

Consolidated revenues at Rs.37.6 billion, year-on-year decline of 3%

•

EBITDA at Rs.4.8 billion, 12.8% of revenues. Adjusted* EBITDA at 24.0% of revenues.

Commenting on the company’s fourth quarter results, Co-chairman and CEO, G V Prasad said “It’s been a challenging quarter for Dr. Reddy’s. While there has been a marginal decline in revenues, there has been a greater impact on profitability. This is mainly due to the provision, made as a matter of abundant precaution, to write down our outstanding receivables from Venezuela. We will continue to actively engage with the Venezuelan Government to provide affordable medicine to fulfil the need of people of the country, subject to repatriation of funds.

Our Bio-similars business is gaining traction, as we have started to receive approvals and build partnerships for our products in the emerging markets. Our topmost priority continues to be the strengthening of our quality management processes across the organisation.”

*	Adjusted for impact of devaluation and translation, on certain monetary assets and liabilities of our Venezuela subsidiary


All amounts in millions, except EPS		All US dollar amounts based on convenience translation rate of I USD = Rs.66.25

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement


	FY 16									FY 15									Growth %
Particulars	($)			(Rs.)			%			($)			(Rs.)			%			Growth %
Revenues		2,335			1,54,708			100.0			2,237			1,48,189			100.0			4
Cost of revenues		942			62,427			40.4			948			62,786			42.4			(1	)

Gross profit		1,393			92,281			59.6			1,289			85,403			57.6			8

Operating Expenses
Selling, general & administrative expenses		690			45,702			29.5			643			42,585			28.7			7
Research and development expenses		269			17,834			11.5			263			17,449			11.8			2
Other operating expense / (income)		(13	)		(874	)		(0.6	)		(14	)		(917	)		(0.6	)		(5	)

Results from operating activities		447			29,619			19.1			397			26,286			17.7			13

Finance expense / (income), net		41			2,708			1.8			(25	)		(1,682	)		(1.1	)		NM
Share of (profit) of equity accounted investees, net of income tax		(3	)		(229	)		(0.1	)		(3	)		(195	)		(0.1	)		18

Profit before income tax		410			27,140			17.5			425			28,163			19.0			(4	)

Income tax expense		108			7,127			4.6			90			5,984			4.0			19

Profit for the period		302			20,013			12.9			335			22,179			15.0			(10	)


Diluted EPS		1.77			117						1.96			130						(10	)

EBITDA Computation


	FY 16						FY 15
Particulars	($)			(Rs.)			($)			(Rs.)
Profit before tax		410			27,140			425			28,163
Interest (income) / expense net*		(22	)		(1,425	)		(11	)		(724	)
Depreciation		104			6,874			86			5,719
Amortization		52			3,469			36			2,381
Impairment		2.9			194			9.5			629

EBITDA		547			36,252			546			36,168

EBITDA (% to sales)					23.4						24.4

Adjusted EBITDA (% to sales)**					26.7						25.0

*	Includes income from investments

**	Venezuela adjustment

The Company has not received approvals from the Venezuelan government to repatriate any amount beyond USD 4 million already received during the year. The Company believes that in the interim, it is appropriate to use the DICOM rate (i.e. 272.5 VEF per USD) instead of official ‘preferential’ rate (i.e. 10 VEF per USD) for translating the monetary assets and liabilities of the Venezuelan subsidiary as at 31 March 2016. Accordingly, the resultant impact for Q4 FY 16 and Fiscal 2016 is Rs. 4,309 million and Rs. 5,085 million respectively. Similar charge on account of translation of net monetary assets was Rs. 843 million accrued in Q4 FY 15.


All amounts in millions, except EPS		All US dollar amounts based on convenience translation rate of I USD = Rs.66.25

Key Balance Sheet Items


Particulars	As on 31^st Mar 16				As on 31^st Mar 15
Particulars	($)		(Rs.)		($)		(Rs.)
Cash and cash equivalents and Other current Investments		603		39,955		599		39,654
Trade receivables		623		41,306		615		40,755
Inventories		386		25,578		385		25,529
Property, plant and equipment		815		53,961		726		48,090
Goodwill and Other Intangible assets		372		24,644		248		16,430
Loans and borrowings (current & non-current)		506		33,513		651		43,125
Trade payables		186		12,300		161		10,660
Equity		1,937		1,28,336		1,680		1,11,302

Revenue Mix by Segment


Particulars	FY 16						FY 15						Growth %
Particulars	($)		(Rs.)		%		($)		(Rs.)		%		Growth %
Global Generics		1,933		1,28,062		83		1,802		1,19,397		81		7
North America				75,445						63,564				19
Europe*				7,732						6,482				19
India				21,293						17,870				19
Emerging Markets^#				23,592						31,482				-25
PSAI		338		22,379		14		384		25,456		17		-12
North America				3,052						4,605				-34
Europe				9,313						10,507				-11
India				2,618						3,288				-20
Rest of World				7,396						7,056				5
Proprietary Products & Others		64		4,267		3		50		3,336		2		28

Total		2,335		1,54,708		100		2,237		1,48,189		100		4

*	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 FY16 are at Rs.128.1 billion, year-on-year growth of 7%; primarily driven by North America, Europe and India.

•

Revenues from North America for FY16 at Rs.75.4 billion, year-on-year growth of 19%. Growth primarily on account of sustained performance of the injectable franchise and market share gains in key molecules. Habitrol integration in line with the expectation and focus is on expanding the franchise

14 new generics filings in the US during the year (13 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 FY16 at Rs.23.6 billion, year-on-year decline of 25%.

•

Revenues from Russia at Rs.10.6 billion, year-on-year decline of 29% primarily on account of depreciation of rouble. In constant currency revenues grew by 1% year-on-year.

•

Revenues from other CIS countries and Romania market at Rs.3.5 billion, year-on-year growth of 1%.

•

Revenues from Rest of World (RoW) territories at Rs.9.4 billion, year-on-year decline of 28% primarily on account of calibrated sales in Venezuela.

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Revenues from India for FY16 at Rs.21.3 billion, year-on-year growth of 19%.

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Continued momentum of mega brands.

•

Portfolio acquired from UCB well-integrated and performance inline with expectations. Normalizing for contribution from the UCB portfolio, growth of the base business during the year is healthy

•

Revenues from Europe for FY16 at Rs.7.7 billion, year-on-year growth of 19%. Growth was primarily driven by aripiprazole and pregabalin.

Pharmaceutical Services and Active Ingredients (PSAI)

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Revenues from PSAI at Rs.22.4 billion, year-on-year decline of 12%.

•

During the year, 50 DMFs were filed globally of which 8 were in the US. The cumulative number of DMF filings as of March 31, 2016 was 768.

Income Statement Highlights:

•

Gross profit margin at 59.6% and improved by ~200 bps over that of previous year. Gross profit margin for Global Generics (GG) and PSAI business segments are at 65.9% and 22.0% respectively.

•

SG&A expenses at Rs.45.7 billion, year-on-year growth of 7%. This increase is largely due to the ongoing remediation activities related to the USFDA’s observations, settlement of patent litigation on zoledronic acid, launch related activities of the Proprietary Products business and certain routine items related to manpower and other spends.

•

Research & development expenses at Rs.17.8 billion. 11.5% of revenues in FY16 as compared to 11.8% in FY15. Continued focus on building complex generics and differentiated products pipeline.

•

Net Finance expense at Rs.2,708 million in FY 16 compared to the net finance income of Rs.1,681 million in FY15. The incremental charge of Rs.4,389 million is on account of:

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Increase in the net interest income by Rs.701 million

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Net foreign exchange loss of Rs.4,133 million in FY 16 vs net foreign exchange gain of Rs.958 million in FY 15. Current year’s foreign exchange loss is primarily on account of Venezuela related adjustments as detailed on Page 2

•

Profit after Tax at Rs.20.0 billion.

•

Diluted earnings per share is at Rs.117

•

Capital expenditure is at Rs.11.9 billion.

The board has recommended payment of a dividend of Rs. 20 per equity share of face value Rs 5/- each (400% of face value) for the year ended March 31, 2016 subject to approval of members


All amounts in millions, except EPS		All US dollar amounts based on convenience translation rate of I USD = Rs.66.25

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement


Particulars	Q4 FY 16							Q4 FY 15							Growth %
Particulars	($)		(Rs.)		%			($)		(Rs.)		%			Growth %
Revenues		567		37,562		100.0			584		38,704		100.0			(3	)
Cost of revenues		246		16,286		43.4			264		17,483		45.2			(7	)

Gross profit		321		21,276		56.6			320		21,221		54.8			0

Operating Expenses
Selling, general & administrative expenses		176		11,632		31.0			152		10,082		26.0			15
Research and development expenses		74		4,879		13.0			78		5,144		13.3			(5	)
Other operating expense / (income)		-5		-307		(0.8	)		-2		-125		(0.3	)		145

Results from operating activities		77		5,072		13.5			92		6,120		15.8			(17	)

Finance expense / (income), net		40		2,646		7.0			4		233		0.6			NM
Share of (profit) of equity accounted investees, net of income tax		-1		-59		(0.2	)		-1		-43		(0.1	)		36

Profit before income tax		38		2,485		6.6			90		5,930		15.3			(58	)

Income tax expense		26		1,739		4.6			11		742		1.9			134

Profit for the period		11		746		2.0			78		5,188		13.4			(86	)


Diluted EPS		0.07		4.4					0.46		30.4					(86	)

EBITDA Computation


Particulars	Q4 FY 16						Q4 FY 15
Particulars	($)			(Rs.)			($)			(Rs.)
Profit before tax		38			2,485			90			5,930
Interest (income) / expense net*		(11	)		(713	)		(3	)		(194	)
Depreciation		31			2,062			23			1,530
Amortization		15			970			11			699
Impairment		—			—			1.4			95

EBITDA		73			4,804			122			8,061

EBITDA (% to sales)					12.8						20.8

Adjusted EBITDA (% to sales)**					24.0						23.0

*	Includes income from investments

**	Venezuela adjustment for current and previous period as explained in details on Page 2


All amounts in millions, except EPS		All US dollar amounts based on convenience translation rate of I USD = Rs.66.25


Particulars	Q4 FY 16						Q4 FY 15						Growth %
Particulars	($)		(Rs.)		%		($)		(Rs.)		%		Growth %
Global Generics		465		30,774		82		464		30,717		80		0
North America				18,950						16,879				12
Europe*				1,759						2,145				-18
India				5,267						4,744				11
Emerging Markets^#				4,799						6,949				-31
PSAI		87		5,766		15		112		7,415		19		-22
North America				742						1,866				-60
Europe				2,585						2,639				-2
India				603						669				-10
Rest of World				1,835						2,241				-18
Proprietary Products & Others		15		1,022		3		8		572		1		79

Total		567		37,562		100		584		38,704		100		-3

Earnings Call Details (06.30 pm IST, May 12, 2016)

The Company will host an earnings call at 06.30 pm IST on May 12, 2016, to discuss the performance and answer any questions from participants. This call will be accessible through an audio dial-in and a web-cast.

Audio conference Participants can dial-in on the numbers below


Primary number:		91 22 3960 0616
Secondary number:		91 22 6746 5826
International Toll Free Number	USA	18667462133
	UK	08081011573
	Singapore	8001012045
	Hong Kong	800964448


Playback of call:		91 22 3065 2322, 91 22 6181 3322
Conference ID:		375#
Web-cast		More details will be provided through our website, www.drreddys.com

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. (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 gastro-intestinal, cardiovascular, diabetology, oncology, pain management and anti-infectives. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, Russia & CIS, Venezuela and India. 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.