EX-99.1 2 drr0167_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1 

 

 

DR. REDDY'S LABORATORIES LTD.

CONTACT

8-2-337, Road No. 3, Banjara Hills,

Investor relationS

Media relationS

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 Q2 & H1 FY20 Financial Results

 

Hyderabad, India, November 1, 2019: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for the quarter and the half year ended September 30, 2019 under International Financial Reporting Standards (IFRS).

 

Q2 Performance Summary

 

H1 Performance Summary

 

 

 

Rs. 4,801 Cr

Revenue

[Up: 25% QoQ; 26% YoY]

 

57.5%

Gross Margin

[Q1 FY20: 51.7%; Q2 FY19: 55.0%]

 

Rs.1,678 Cr

SGNA expenses

[Up: 39% QoQ, 36% YoY]

 

Rs. 366 Cr

R&D expenses

[7.6% of Revenues]

 

Rs. 766 Cr

Profit before Tax

[Down: 10% QoQ; Up: 33% YoY]

 

Rs. 1,093 Cr

Profit after Tax

[Up: 65% QoQ; Up: 117% YoY]

 

Rs. 8,644 Cr

Revenue

[Up: 15% YoY]

 

54.9%

Gross Margin

[H1 FY19: 55.4%]

 

Rs. 2,884 Cr

SGNA expenses

[Up: 18% YoY]

 

Rs. 727 Cr

R&D expenses

[8.4% of Revenues]

 

Rs. 1,616 Cr

Profit before Tax

[Up: 50% YoY]

 

Rs. 1,755 Cr

Profit after Tax

[Up: 83% YoY]

 

Commenting on the results, Co-Chairman and MD, GV Prasad said “I am pleased with our performance across the businesses and strong cash generation during the quarter. We are progressing well in execution of our strategy and in our transformation journey on quality and efficiency”.

 
 
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs. 70.64

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Consolidated Income Statement

 

 

 

Q2 FY20

 

 

Q2 FY19

 

 

YoY

 

 

Q1 FY20

 

 

QoQ

 

Particulars

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

 

Gr %

 

 

($)

 

 

(Rs.)

 

 

Gr%

 

Revenues

 

 

680

 

 

 

48,009

 

 

 

538

 

 

 

37,978

 

 

 

26

 

 

 

544

 

 

 

38,435

 

 

 

25

 

Cost of Revenues

 

 

289

 

 

 

20,389

 

 

 

242

 

 

 

17,081

 

 

 

19

 

 

 

263

 

 

 

18,576

 

 

 

10

 

Gross Profit

 

 

391

 

 

 

27,620

 

 

 

296

 

 

 

20,897

 

 

 

32

 

 

 

281

 

 

 

19,859

 

 

 

39

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General & Administrative expenses

 

 

238

 

 

 

16,777

 

 

 

175

 

 

 

12,372

 

 

 

36

 

 

 

171

 

 

 

12,065

 

 

 

39

 

Research and Development expenses

 

 

52

 

 

 

3,662

 

 

 

58

 

 

 

4,120

 

 

 

(11

)

 

 

51

 

 

 

3,609

 

 

 

1

 

Other operating (income)

 

 

-2

 

 

 

-135

 

 

 

-9

 

 

 

-641

 

 

 

(79

)

 

 

-53

 

 

 

-3,759

 

 

 

(96

)

Results from operating activities

 

 

104

 

 

 

7,316

 

 

 

71

 

 

 

5,046

 

 

 

45

 

 

 

112

 

 

 

7,944

 

 

 

(8

)

Net finance (income)

 

 

-3

 

 

 

-231

 

 

 

-9

 

 

 

-625

 

 

 

(63

)

 

 

-6

 

 

 

-393

 

 

 

(41

)

Share of (profit) / loss of equity accounted investees

 

 

-2

 

 

 

-117

 

 

 

-2

 

 

 

-109

 

 

 

8

 

 

 

-2

 

 

 

-163

 

 

 

(28

)

Profit before income tax

 

 

108

 

 

 

7,664

 

 

 

82

 

 

 

5,780

 

 

 

33

 

 

 

120

 

 

 

8,500

 

 

 

(10

)

Income tax expense / (benefit)

 

 

-46

 

 

 

-3,261

 

 

 

11

 

 

 

742

 

 

 

(539

)

 

 

26

 

 

 

1,872

 

 

 

(274

)

Profit for the period

 

 

155

 

 

 

10,925

 

 

 

71

 

 

 

5,038

 

 

 

117

 

 

 

94

 

 

 

6,628

 

 

 

65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share (EPS)

 

 

0.93

 

 

 

65.82

 

 

 

0.43

 

 

 

30.31

 

 

 

117

 

 

 

0.57

 

 

 

39.91

 

 

 

65

 

 

As % to Revenues

 

Q2
FY20

 

 

Q2
FY19

 

 

Q1

FY20

 

Gross Profit

 

 

57.5

 

 

 

55.0

 

 

 

51.7

 

SG&A

 

 

34.9

 

 

 

32.6

 

 

 

31.4

 

R&D

 

 

7.6

 

 

 

10.8

 

 

 

9.4

 

EBITDA

 

 

29.9

 

 

 

22.8

 

 

 

29.5

 

PBT

 

 

16.0

 

 

 

15.2

 

 

 

22.1

 

PAT

 

 

22.8

 

 

 

13.3

 

 

 

17.2

 

 

EBITDA Computation

 

 

 

Q2 FY20

 

 

Q2 FY19

 

 

Q1 FY20

 

Particulars

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

Profit before Income Tax

 

 

108

 

 

 

7,664

 

 

 

82

 

 

 

5,780

 

 

 

120

 

 

 

8,500

 

Interest (income) net*

 

 

-3

 

 

 

(226

)

 

 

(2

)

 

 

(132

)

 

 

(3

)

 

 

(239

)

Depreciation

 

 

33

 

 

 

2,306

 

 

 

29

 

 

 

2,033

 

 

 

30

 

 

 

2,124

 

Amortization

 

 

15

 

 

 

1,033

 

 

 

14

 

 

 

965

 

 

 

14

 

 

 

959

 

Impairment

 

 

50

 

 

 

3,561

 

 

 

-

 

 

 

-

 

 

 

(0

)

 

 

(1

)

EBITDA

 

 

203

 

 

 

14,338

 

 

 

122

 

 

 

8,646

 

 

 

161

 

 

 

11,343

 

 

* Includes income from Investments

 
 
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs. 70.64

 

Key Balance Sheet Items

 

 

 

As on 30th Sep,
2019

 

 

As on 30th June
2019

 

 

As on 30th Sep
2018

 

Particulars

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

Cash and cash equivalents and other investments

 

 

431

 

 

 

30,446

 

 

 

403

 

 

 

28,439

 

 

 

295

 

 

 

20,837

 

Trade receivables (current & non-current)

 

 

597

 

 

 

42,153

 

 

 

537

 

 

 

37,961

 

 

 

656

 

 

 

46,317

 

Inventories

 

 

496

 

 

 

35,033

 

 

 

497

 

 

 

35,137

 

 

 

460

 

 

 

32,490

 

Property, plant and equipment

 

 

750

 

 

 

53,008

 

 

 

766

 

 

 

54,083

 

 

 

802

 

 

 

56,640

 

Goodwill and Other Intangible assets

 

 

628

 

 

 

44,340

 

 

 

677

 

 

 

47,821

 

 

 

726

 

 

 

51,290

 

Loans and borrowings (current & non-current)

 

 

447

 

 

 

31,545

 

 

 

487

 

 

 

34,387

 

 

 

786

 

 

 

55,522

 

Trade payables

 

 

218

 

 

 

15,434

 

 

 

210

 

 

 

14,842

 

 

 

199

 

 

 

14,073

 

Equity

 

 

2,177

 

 

 

1,53,816

 

 

 

2,070

 

 

 

1,46,208

 

 

 

1,861

 

 

 

1,31,446

 

 

Revenue Mix by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QoQ

 

 

 

Q2 FY20

 

 

Q2 FY19

 

 

YoY

 

 

Q1 FY20

 

 

Growth

 

Particulars

 

(Rs.)

 

 

(Rs.)

 

 

Growth %

 

 

(Rs.)

 

 

%

 

Global Generics

 

 

32,816

 

 

 

30,536

 

 

 

7

%

 

 

32,982

 

 

 

-1

%

North America

 

 

14,265

 

 

 

14,265

 

 

 

0

%

 

 

16,322

 

 

 

-13

%

Europe

 

 

2,764

 

 

 

1,915

 

 

 

44

%

 

 

2,404

 

 

 

15

%

India

 

 

7,511

 

 

 

6,864

 

 

 

9

%

 

 

6,960

 

 

 

8

%

Emerging Markets

 

 

8,276

 

 

 

7,492

 

 

 

10

%

 

 

7,296

 

 

 

13

%

Pharmaceutical Services and Active Ingredients (PSAI)

 

 

7,107

 

 

 

6,029

 

 

 

18

%

 

 

4,539

 

 

 

57

%

Proprietary Products & Others

 

 

8,086

 

 

 

1,413

 

 

 

472

%

 

 

914

 

 

 

785

%

Total

 

 

48,009

 

 

 

37,978

 

 

 

26

%

 

 

38,435

 

 

 

25

%

 
 
 
 

Segmental Analysis

 

Global Generics (GG)

 

Revenues from GG segment at Rs. 32.8 billion. Year-on-year growth of 7%, primarily driven by Europe, Emerging Markets and India. Sequentially declined by 1%.

 

·

Revenues from North America at Rs. 14.3 billion. Year-on-year revenues remained flat. Sequential decline of 13%, on account of price erosion and lower volumes. Further impact on account of voluntary recall of ranitidine and temporary disruption in supplies due to logistics issues faced during this quarter. We launched eight new products during the quarter, which are Carboprost, Ramelteon, Fosaprepitant, Pregabalin, Vigabatrin, Docetaxel 160mg, Bupropion SR and OTC Guaif / Psuedo.

 

As of 30th September 2019, cumulatively 99 generic filings are pending for approval with the USFDA (96 ANDAs and 3 NDAs under 505(b)(2) route). Of these 96 ANDAs, 55 are Para IVs out of which we believe 31 have ‘First to File’ status.

 

·

Revenues from Europe at Rs. 2.8 billion. Year-on-year growth of 44%, primarily on account of new products and volume traction in base business partly offset by lower realizations. Sequential growth is 15%.

 

·

Revenues from India at Rs. 7.5 billion. Year-on-year growth of 9%, driven by new products, improved realizations and volume traction in base business. Sequential growth is 8%.

 

·

Revenues from Emerging Markets at Rs. 8.3 billion. Year-on-year growth is 10%. Sequential growth is 13%.

 

-

Revenues from Russia at Rs. 4.1 billion. Year-on-year growth of 8%. Growth primarily driven by increase in volumes coupled with better realizations in some of the key molecules.

 

-

Revenues from other CIS countries and Romania at Rs. 1.7 billion. Year-on-year growth of 16% largely driven by new products and better realizations in some of the key molecules.

 

-

Revenues from Rest of World (RoW) markets at Rs. 2.5 billion. Year-on-year growth of 11%, primarily driven by new products, volume traction partly offset by price erosions in some of the key molecules.

 

Pharmaceutical Services and Active Ingredients (PSAI)

 

·

Revenues from PSAI at Rs. 7.1 billion. Year-on-year growth of 18% and sequential growth of 57%. Growth largely driven by increase in volumes from existing products.

 

Proprietary Products (PP)

 

·

Revenues from PP at Rs. 7.4 billion. It includes Rs. 7.2 billion towards license fee for selling US and select territory rights for two of our Neurology brands ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRATM (sumatriptan nasal spray) 10 mg, to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

 
 
 

Income Statement Highlights:

 

·

Gross profit margin at 57.5%, improved by ~590 bps sequentially and ~250 bps over that of previous year. Gross profit margin for GG and PSAI business segments are at 55.5% and 24.6% respectively.

 

-

gross margin is benefitted due to revenue recognition of the PP Neuro brands

 

-

partly impacted by certain one-off’s, including but not restricted to the impact of the voluntary recall of Ranitidine in the US market

 

-

adjusted for one-off’s, normalized gross profit margin is ~51.5%

 

-

on a normalized base, the year on year decline is primarily on account of price erosion in the US.

 

·

SG&A expenses at Rs. 16.8 billion, an increase of 36% on a year-on-year basis and 39% sequentially. This includes an amount of Rs. 3.6 billion recognized as an impairment charge on three product related intangibles (viz., Ramelteon, Tobramycin and Imiquimod). There have been certain additional one-offs including but not restricted to the costs associated with the sale of two neurology brands. Adjusted for the one-offs, the normalized SG&A expenses are lower compared to the previous quarter.

 

·

R&D expenses at Rs. 3.7 billion. As % to Revenues- Q2 FY20: 7.6% | Q1 FY 20: 9.4% | Q2 FY19: 10.8%. We continue to focus on building a healthy development pipeline across all our focused markets.

 

·

Other operating income at Rs. 135 million compared to Rs. 641 million in Q2 FY19 and Rs. 3,759 million in Q1 FY 20. Previous year includes gain of Rs. 464 million on account of sale of rights relating to Cloderm brand (including its authorized generic) and profit on sale of antibiotic manufacturing facility in Bristol, US. Q1 FY 20 includes Rs. 3,457 million received from Celgene pursuant to an agreement entered towards 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.

 

·

Net Finance income at Rs. 231 million compared to Rs. 625 million in Q2 FY19 and Rs. 393 million in Q1 FY 20. The year-on-year decline is primarily on account of lower foreign exchange gain, partly offset by higher profit on sale of investments during the quarter.

 

·

Profit after Tax at Rs. 10.9 billion. The net tax for the quarter is a benefit of Rs. 3.3 billion; due to recognition of deferred tax assets of Rs. 5.2 billion, primarily related to the MAT credit.

 

·

Diluted earnings per share is at Rs. 65.8.

 

·

Capital expenditure is at Rs. 1.1 billion.

 
 
 

Earnings Call Details (06:30 pm IST, 09:00 am EDT, November 1, 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:

31923

 

Transcript of the event will be available at www.drreddys.com. Playback will be available after the earnings call, till November 8, 2019.

 

 

 

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.