EX-99.1 2 drr0122_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

  CONTACT
DR. REDDY'S LABORATORIES LTD. Investor relationS Media relationS
8-2-337, Road No. 3, Banjara Hills,
Hyderabad - 500034. Telangana, India.		 AMIT AGARWAL
amita@drreddys.com
(Ph: +91-40-4900 2135)		 MITALI SARKAR
mitali.sarkar@drreddys.com
(Ph: +91-40-4900 2121)

 

 

 

Dr. Reddy’s Q4 & FY19 Financial Results

 

Hyderabad, India, May 17, 2019: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2019 under International Financial Reporting Standards (IFRS).

 

Q4 Performance Summary   FY19 Performance Summary
     
Rs. 4,017 Cr   Rs. 15,385 Cr
Revenue   Revenue
[Up: 4% QoQ; 14% YoY]   [Up: 8% YoY]
     
52.4%   54.2%
Gross Margin   Gross Margin
[Q3 FY19: 53.9%; Q4 FY18: 53.5%]  

[FY18: 53.7%]

     
Rs. 1,238 Cr   Rs. 4,889 Cr
SGNA expenses   SGNA expenses
[Up: 3% YoY]   [Up: 4% YoY]
     
Rs. 366 Cr   Rs. 1,561 Cr
R&D expenses   R&D expenses
[9.1% of Revenues]   [10.1% of Revenues]
     
Rs. 585 Cr   Rs. 2,244 Cr
Profit before Tax   Profit before Tax
[14.6% of Revenues]   [14.6% of Revenues]

 

Commenting on the results, CEO and Co-chairman, G.V. Prasad said “It has been a very good year with a significant turnaround in the financial performance and steady progress on the quality front. Looking ahead, we will focus on profitable growth, continue the emphasis on operational excellence and drive innovation to deliver value to patients and healthcare systems worldwide.”

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 69.16

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Consolidated Income Statement

 

   Q4 FY19   Q4 FY18   YoY   Q3 FY19   QoQ 
Particulars  ($)   (Rs.)   ($)   (Rs.)   Gr %   ($)   (Rs.)   Gr% 
Revenues   581    40,166    511    35,349    14    557    38,500    4 
Cost of Revenues   276    19,113    238    16,454    16    257    17,748    8 
Gross Profit   304    21,053    273    18,895    11    300    20,752    1 
Operating Expenses                                        
Selling, General & Administrative expenses   179    12,376    174    12,067    3    174    12,036    3 
Research and Development expenses   53    3,662    63    4,348    (16)   53    3,668    (0)
Other operating (income)   (5)   (330)   (2)   (167)   97    (10)   (681)   (51)
Results from operating activities   77    5,345    38    2,647    102    83    5,729    (7)
Net finance (income) / expense   (5)   (349)   (15)   (1,032)   (66)   0    13    - 
Share of (profit) / loss of equity accounted investees   (2)   (157)   (1)   (69)   127    (1)   (89)   77 
Profit before income tax   85    5,851    54    3,748    56    84    5,805    1 
Income tax expense   22    1,507    11    726    107    14    953    58 
Profit for the period   63    4,344    44    3,022    44    70    4,852    (10)
                                         
Diluted Earnings Per Share (EPS)   0.38    26.16    0.26    18.18    44    0.42    29.21    (10)

 

As % to Revenues  Q4 FY19   Q4 FY18   Q3 FY19 
Gross Profit   52.4    53.5    53.9 
SG&A   30.8    34.1    31.3 
R&D   9.1    12.3    9.5 
PBT   14.6    10.6    15.1 
PAT   10.8    8.5    12.6 

 

EBITDA Computation

 

   Q4 FY19   Q4 FY18   Q3 FY19 
Particulars  ($)   (Rs.)   ($)   (Rs.)   ($)   (Rs.) 
Profit before Income Tax   85    5,851    54    3,748    84    5,805 
Interest (income) net*   (3)   (215)   (14)   (1,001)   (4)   (260)
Depreciation #   31    2,136    31    2,109    30    2,073 
Amortization #   15    1,047    13    921    15    1,035 
EBITDA   128    8,819    84    5,777    125    8,653 
EBITDA (% to revenues)        22.0         16.3         22.5 

 

* - 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. 69.16

 

Revenue Mix by Segment

 

   Q4 FY19   Q4 FY18   YoY   Q3 FY19   QoQ 
Particulars  (Rs.)   (Rs.)   Growth %   (Rs.)   Growth % 
Global Generics   30,384    27,836    9    31,347    (3)
North America   14,957    14,487    3    14,832    1 
Europe*   1,912    1,711    12    2,030    (6)
India   6,505    6,138    6    6,741    (4)
Emerging Markets #   7,010    5,500    27    7,744    (9)
Pharmaceutical Services and Active Ingredients (PSAI)   6,765    6,251    8    5,937    14 
Proprietary Products & Others   3,017    1,262    139    1,216    148 
Total   40,166    35,349    14    38,500    4 

 

 

* Europe primarily includes Germany and UK

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

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 69.16

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Consolidated Income Statement

 

   FY 19   FY 18   Growth 
Particulars  ($)   (Rs.)   %   ($)   (Rs.)   %   % 
Revenues   2,225    1,53,851    100.0    2,054    1,42,028    100.0    8 
Cost of Revenues   1,018    70,421    45.8    950    65,724    46.3    7 
Gross Profit   1,206    83,430    54.2    1,103    76,304    53.7    9 
Operating Expenses                                   
Selling, General & Administrative expenses   707    48,890    31.8    678    46,910    33.0    4 
Research and Development expenses   226    15,607    10.1    264    18,265    12.9    (15)
Other operating (income)   (28)   (1,955)   (1.3)   (11)   (788)   (0.6)   148 
Results from operating activities   302    20,888    13.6    172    11,917    8.4    75 
Finance (income), net   (16)   (1,117)   (0.7)   (30)   (2,080)   (1.5)   (46)
Share of (profit) of equity accounted investees, net of income tax   (6)   (438)   (0.3)   (5)   (344)   (0.2)   27 
Profit before income tax   325    22,443    14.6    207    14,341    10.1    56 
Income tax expense   53    3,648    2.4    66    4,535    3.2    (20)
Profit for the period   272    18,795    12.2    142    9,806    6.9    92 
                                    
Diluted Earnings Per Share (EPS)   1.64    113.09         0.85    59.00         92 

 

EBITDA Computation

 

   FY 19   FY 18 
Particulars  ($)   (Rs.)   ($)   (Rs.) 
Profit before income tax   325    22,443    207    14,341 
Interest (income) / expense net*   (9)   (654)   (29)   (2,022)
Depreciation #   122    8,456    120    8,285 
Amortization #   57    3,944    50    3,477 
EBITDA   494    34,189    348    24,081 
EBITDA (% to revenues)        22.2         17.0 

 

* - Includes income from Investments        # includes impairment charge

 

Key Balance Sheet Items

 

   As on 31st Mar
2019		   As on 31st Dec
2018		   As on 31st Mar
2018		 
Particulars  ($)   (Rs.)   ($)   (Rs.)   ($)   (Rs.) 
Cash & cash equivalents and investments   370    25,570    370    25,593    340    23,517 
Trade receivables (current & non-current)   578    39,982    539    37,302    590    40,786 
Inventories   486    33,579    490    33,911    421    29,089 
Property, plant and equipment   782    54,088    800    55,344    837    57,869 
Goodwill and Other Intangible assets   698    48,269    711    49,205    703    48,610 
Loans and borrowings (current & non-current)   555    38,381    634    43,836    733    50,714 
Trade payables   210    14,553    230    15,939    232    16,052 
Equity   2,027    1,40,197    1,962    1,35,708    1,829    1,26,460 

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 69.16

 

Revenue Mix by Segment [Year on year]

 

Particulars  FY 19   FY 18   Growth 
   ($)   (Rs.)   %   ($)   (Rs.)   %   % 
Global Generics   1,777    1,22,903    79.9    1,649    1,14,014    80.3    8 
North America        59,957              59,822         0.2 
Europe*        7,873              8,217         (4)
India        26,179              23,322         12 
Emerging Markets#        28,894              22,653         28 
Pharmaceutical Services and Active Ingredients (PSAI)   349    24,140    15.7    318    21,992    15.5    10 
Proprietary Products & Others   98    6,808    4.4    87    6,022    4.2    13 
Total   2,225    1,53,851    100    2,054    1,42,028    100    8 

 

 

*Europe primarily includes Germany and UK
#Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets

 

 

 

 

Segmental Analysis [Full Year and Q4 FY 19]

 

Global Generics (GG)

 

Revenues from GG segment at Rs. 123 billion. Year-on-year (YoY) growth of 8%

 

Growth on account of higher contribution from Emerging Markets and India; primarily due to volume gains, new launches and scale up of new markets.

 

-Revenues from North America for the year at Rs. 60.0 billion, and remained flat on a YoY basis. The year was benefited by new launches, market share gains for existing products and a favorable forex rate, which was offset by price erosion in some of our key molecules.

 

-Revenues for the Q4 at Rs. 15.0 billion, YoY growth of 3% and sequential growth of 1%. During this quarter, we launched 5 new products – major ones being Propofol injection and Tadalafil (Adcirca and Cialis).

 

As of 31st March 2019, cumulatively 110 generic filings are pending for approval with the USFDA (107 ANDAs and 3 NDAs under 505(b)(2) route). Of these 107 ANDAs, 60 are Para IVs out of which we believe 34 have ‘First to File’ status.

 

·Revenues from Emerging Markets for the year at Rs. 28.9 billion, YoY growth of 28%.

 

-Revenues from Russia for the year at Rs. 15.3 billion, YoY growth of 21%. Growth was majorly driven by scale up of Nasivin launched during FY 18 and improvement in base business, partially offset by adverse exchange rate movement.

 

-Revenues for the Q4 at Rs. 3.6 billion, YoY growth of 41%. Growth primarily driven by better volume traction as previous year was impacted by lower volume off-take by the channel.

 

-Revenues from other CIS countries and Romania for the year at Rs. 5.2 billion, YoY growth of 34%.

 

-Revenues from Rest of World (RoW) territories for the year at Rs. 8.4 billion, YoY growth of 36%. Growth primarily on account of new launches and volume traction in key products.

 

·Revenues from India for the year at Rs. 26.2 billion, YoY growth of 12%, with a growth in base business and new product launches. Revenues for Q4 at Rs. 6.5 billion, YoY growth of 6%.

 

·Revenues from Europe for the year at Rs. 7.9 billion, YoY decline of 4% impacted by price erosion. Revenues for Q4 at Rs. 1.9 billion, YoY growth of 12%, primarily on account of new launches.

 

Pharmaceutical Services and Active Ingredients (PSAI)

 

·Revenues from PSAI for the year at Rs. 24.1 billion, YoY growth of 10%. Growth driven by sales from key molecules and favorable forex. Revenues for the Q4 at Rs. 6.8 billion, YoY growth of 8%

 

·During the quarter, we have filed 4 DMFs in the US.

 

Proprietary Products (PP)

 

·Revenues from PP for the year at Rs. 4.7 billion, YoY growth of 12%. Revenues include Rs. 1.8 billion, realized from the sale of derma brands. In previous year, we had a milestone revenue of Rs. 1.5 billion.

 

 

 

 

Income Statement Highlights [Full Year and Q4 FY 19]

 

·Gross profit margin for the year at 54.2%: Improved by ~50 bps over previous year primarily on account of new launches, leverage on manufacturing overheads, favorable forex rates, offset largely by higher price erosions in the US and Europe markets. Gross profit margin for GG and PSAI business segments are at 58.5% and 25.4% respectively.

 

·Gross profit margin for the Q4 at 52.4% (GG: 56.0%, PSAI: 21.0%).

 

-YoY basis the gross margin declined by ~100 bps, primarily on account of price erosion, partially offset by new launches and favorable forex rates

 

-QoQ basis the gross margin declined by ~150 bps, primarily on account of adverse forex rate from Q3 to Q4, change in the business mix, higher manufacturing overheads due to certain one-off charges and overhead impact on inventory movement. The decline in gross margin was partially offset due to revenue recognition on PP Derma products.

 

·SG&A expenses at Rs. 48.9 billion, YoY increase of 4%. SG&A expenses for the Q4 at Rs. 12.4 billion, year-on-year increase at 3%. We continue to focus on cost optimization and productivity improvement.

 

·Research & development (R&D) expenses at Rs. 15.6 billion. As % to Revenues - FY19: 10.1% | FY 18: 12.9%. Focus continues on building complex generics, bio-similars and differentiated products pipeline. R&D expenses for the Q4 at Rs. 3.7 billion, as % to revenues stood at 9.1%.

 

·Net Finance income for the year at Rs. 1.1 billion compared to Rs. 2.1 billion in FY18. The decline is primarily on account of higher income from profit on sales of investments by Rs. 1.5 billion in previous year.

 

·Profit after Tax at Rs. 18.8 billion. Effective tax rate at 16.3%. Profit after tax for the Q4 at Rs. 4.3 billion. Effective tax rate during the quarter at 25.8%.

 

·Diluted earnings per share for the year is at Rs. 113.1. Diluted earnings per share for Q4 is at Rs. 26.2

 

·Capital expenditure for FY19 is at Rs. 7.0 billion. Capital expenditure for Q4 FY18 is at Rs. 1.8 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, 2019 subject to approval of members.

 

Other Matters

 

As a subsequent event, the company have entered into a settlement agreement with Celgene, pursuant to which the Company received a one-time payment of USD 50 million in settlement 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.

 

 

 

 

Earnings Call Details (06:00 pm IST, 08:30 am EDT, May 17, 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 1 866 746 2133
  UK 0 808 101 1573
  Singapore 800 101 2045
  Hong Kong 800 964 448

 

Playback of call: +91 22 7194 5757, +91 22 6663 5757
Conference ID: 04147

 

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 gastro-intestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, India, Russia and other CIS countries. 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.