July 22, 2010

Dr. Reddy’s Laboratories Ltd.

Business Highlights



Consolidated revenues are at Rs. 16.8 bn ($363 mn) in Q1 FY11 versus Rs. 18.2 bn ($392 mn) in Q1 FY10. Excluding the revenues from sumatriptan in the previous year, the YoY growth is 4%. Profit before Tax for Q1 FY11 is at Rs. 2.5 bn ($53 mn). EBITDA at Rs. 3.4 bn ($74 mn) in Q1 FY11, represents 20% to revenues. Net Profit after Tax for Q1 FY11 is at Rs. 2.1 bn ($45 mn). During the quarter, the company launched 32 new generic products, filed 26 new product registrations and 3 DMFs globally.

Global Generics
Revenues from Global Generics segment are at Rs. 11.9 bn ($257 mn) in Q1 FY11. Excluding the revenues from sumatriptan in the US, the growth is 9%. Revenues from North America at Rs. 3.9 bn ($84 mn) in Q1 FY11 versus Rs. 6.0 bn ($130 mn) in Q1 FY10. Excluding the revenues from sumatriptan, the growth is 5% in dollar currency. Revenues from Europe at Rs. 1.9 bn ($42 mn) in Q1 FY11 versus Rs. 2.1 bn ($45 mn) in Q1 FY10. Revenues from Germany decrease by 18% to Rs. 1.3 bn ($28 mn) in Q1 FY11. For the same period the decline in Euro currency is 6%. Revenues from Rest of Europe grew by 29% to Rs. 516 mn ($11 mn) in Q1 FY11 largely led by the 21% growth in UK. Revenues from Russia & Other CIS markets at Rs. 2.6 bn ($55 mn) in Q1 FY11 versus Rs. 1.9 bn ($40 mn) in Q1 FY10, or a growth of 36%. Revenues in Russia at Rs. 2.1 bn ($44 mn) in Q1 FY11 versus Rs. 1.5 bn ($33 mn) in Q1FY10 or a year-on-year growth of 35%. Dr. Reddy’s year-on-year secondary prescription sales growth stands at 33% versus industry’s growth of 21%. (Source: Pharmexpert April-May 2010) Revenues in Other CIS markets increase by 43% to Rs. 489 mn ($11 mn) in Q1 FY11 versus Rs. 342 mn ($7 mn) in Q1 FY10. Revenues in India at Rs. 2.8 bn ($60 mn) in Q1 FY11 versus Rs. 2.4 bn ($52 mn) in Q1 FY10, a growth of 16% which is largely led by volume growth of existing products. Dr. Reddy’s year-on-year secondary prescription sales growth is 22% versus industry’s growth of 20%. (Source: ORG IMS MAT May 2010) 11 new products launched during the quarter.

Pharmaceutical Services & Active Ingredients (PSAI)
Revenues from PSAI are at Rs. 4.5 bn ($97 mn) in Q1 FY1. During the quarter, 3 DMFs were filed globally. The cumulative DMF filings as of Jun 2010 are 378.

Financial Updates

All figures in millions, except EPS All dollar figures based on convenience translation rate of 1USD = Rs 46.41

Dr. Reddy’s Laboratories Ltd. and Subsidiaries Unaudited Consolidated Income Statement
Q1FY11 Particulars Revenue Cost of Revenues Gross Profit Operating Expenses Selling, general & administrative expenses(a) Research and development expenses, net Other (income)/expenses, net Total Operating Expenses Results from operating activities Finance income Finance expenses(b) Finance expenses, net Share of profit/ (loss) of equity accounted investees Profit before income tax Income tax expense Profit for the period Diluted EPS ($) 363 171 192 118 21 (4) 136 57 (2) 6 4 0 53 (8) 45 0.3 (Rs.) 16,831 7,917 8,914 5,482 993 (186) 6,289 2,625 (99) 276 177 5 2,453 (357) 2,096 12.3 % 100 47 53 33 6 (1) 37 16 (1) 2 1 0 15 (2) 12 ($) 392 173 219 128 21 (1) 148 71 (2) 5 3 0 68 (16) 53 0.3 Q1FY10 (Rs.) 18,189 8,017 10,172 5,927 985 (35) 6,877 3,295 (88) 223 135 11 3,171 (726) 2,445 14.4 % 100 44 56 33 5 (0) 38 18 (0) 1 1 0 17 (4) 13 Growth% (7) (1) (12) (8) 1 431 (9) (20) 13 24 31 (55) (23) (51) (14)

(a) Includes amortization charges of Rs. 288 mn ($6 mn) in Q1FY11 and Rs. 507 mn ($11 mn) in Q1FY10. (b) Includes forex loss of Rs. 225mn ($5 mn) in Q1FY11 and Rs. 84 mn ($2mn) in Q1FY10.

Key Balance Sheet Items
Cash and cash equivalents Trade receivables Inventories Property, plant and equipment Goodwill and Other intangible assets Loans and borrowings (current & non-current) Trade payable Equity & Reserves As on 30 June 10

(in millions)

As on 31st Mar 10 ($) 142 258 288 484 301 317 201 925 (Rs.) 6,584 11,960 13,371 22,459 13,973 14,695 9,322 42,915

($) 137 275 311 516 286 299 209 969

(Rs.) 6,366 12,769 14,451 23,943 13,287 13,872 9,689 44,969

Financial Updates
Income Statement Highlights



Gross profit at Rs. 8.9 bn ($192 mn) in Q1 FY11 at a margin of 53% to revenues versus 56% in Q1 FY10. This change in gross margins is largely on account of a favorable mix of high margin revenues from sumatriptan in the previous year. Selling, General & Administration (SG&A) expenses excluding amortization for the quarter is at Rs. 5.2 bn ($112 mn) or a decline of 4% over the previous year. Excluding the one-time charges recorded on account of betapharm workforce restructure costs of Rs. 496 mn ($11 mn) and the closure of Atlanta facility of Rs. 71 mn ($2 mn) in the previous year, SG&A grew by 7%. Amortization expenses for the quarter at Rs. 288 mn ($6 mn) versus Rs. 507 mn ($11 mn) in Q1 FY10. This decline is on account of the impairment of intangibles recorded in Q3 FY10. Other Operating Income of Rs. 186 mn ($4 mn) in Q1 FY11 versus Rs. 35 mn ($1 mn) in Q1 FY10. R&D expenses at Rs. 993 mn ($21 mn) in Q1 FY11. Finance costs (net) are at Rs. 177 mn ($4 mn) in Q1 FY11 versus Rs. 135 mn ($3 mn) in Q1 FY10. The change is mainly on account of higher forex loss during the quarter: Net forex loss of Rs. 225 mn ($5 mn) in Q1 FY11 versus Rs. 84 mn ($2 mn) in Q1 FY10. EBITDA at Rs. 3.4 bn ($74 mn) in Q1 FY11 represents 20% to sales. Net Profit after Tax for Q1 FY11 is at Rs. 2.1 bn ($45 mn). Diluted EPS is at Rs. 12.3 ($0.3) for the quarter. Capital expenditure for the quarter is at Rs. 1.9 bn ($40 mn).

Revenue Mix by Geography
Q1 FY11 Q1 FY11 as a Q1 FY10 Q1FY10 as a $ INR % $ INR % North America Europe India Russia & other CIS Others TOTAL

(in millions)

Growth %

108 78 74 55 48 363

5,024 3,617 3,411 2,552 2,227 16,831

30 21 20 15 14 100

155 78 65 40 54 392

7,182 39 3,615 20 3,021 17 1,871 10 2,500 14 18,189 100

(30) 0 13 36 (11) (7)

Revenue Mix by Segment
Q1FY11 Q1FY11 $ INR Global Generics North America Europe India Russia & other CIS RoW PSAI (Pharmaceutical Services & Active Ingredients) North America Europe India RoW Others Total 257 84 42 60 55 16 97 18 34 14 32 9 363 11,917 3,897 1,937 2,778 2,552 754 4,499 837 1,555 633 1,474 415 16,831 as a % 71 33 16 23 21 6 27 19 35 14 33 2 100 Q1FY10 Q1FY10 $ INR 281 130 45 52 40 13 105 21 30 14 40 6 392 13,021 6,026 2,106 2,393 1,871 625 4,869 995 1,371 629 1,874 299 18,189 as a % 72 46 16 18 14 5 27 20 28 13 39 2 100

(in millions)

Growth % (8) (35) (8) 16 36 21 (8) (16) 13 1 (21) 38 (7)

Quick Facts - Q1FY11
Global Generics - Key Markets
North America
Rs. Cr (Sumatriptan AG) 205 Base Business 397
(2%) 390



7 --> ANDA approvals (1 tentative) ; 5 --> ANDA filings ; 3 --> new product launches Successful launches of limited competition products such as amlodipine benazepril & tacrolimus Base business --> Leverage the benefits from our vertically integrated products to target higher market shares Cumulative ANDAs--> 163; Pending approvals - 71, Para IVs - 36, FTFs - 12




Rest of Europe Rs. Cr

Revenues of Euro 23 mn ; marginal decline of 6% in local currency terms Competitiveness in bidding for new tenders leveraged by:
Significant optimization of SG&A in the last one year Efforts to increase vertical integration of existing products at betapharm

Germany Rs. Cr

(18%) 132



Rs. Cr





16% 239 278

Growth largely driven by new product launches and increased volumes in existing business New product launches --> 11 Darbepoetin (our third biosimilar product in India) --> Received final manufacturing approval ; expect to commercialize shortly Secondary Sales Growth : Dr. Reddy’s-->22%; Industry-->20%; Top 10-->21% Dr. Reddy’s Rank-->14th
Source: ORG IMS (MAT Jun 10)



YoY growth of 44% and sequential growth of 32% in dollar terms ; Growth driven by volume increase largely in key brands of Nise, Omez, Cetrine & Ketorol High growth was witnessed across all companies in the industry largely due to re-stocking of inventory in the recent months by distributors 4 new products launched during the quarter Secondary Sales Growth: Dr. Reddy’s --> 33%; Industry --> 21% Dr. Reddy’s Rank --> 15th
Source: Pharmexpert (MAT Mar 10)
Rs. Cr





Pharmaceutical Services & Active Ingredients
Rs. Cr


Revenue growth is flat in constant currency terms No new significant launches of API in the recent quarters and the impact of volume increases is being offset by price decreases 3 RoW DMF filings during the quarter




DMFs Pipeline: Cumulative-->378; US-->156 Europe-->90 Canada-->59 RoW-->73

Key Company Updates


Dr. Reddy’s announced the Launch of Amlodipine Benazepril in the US market
Dr. Reddy’s announced the Launch of Amlodipine Benazepril capsules (2.5mg/10mg, 5mg/10mg, 5mg/20mg, 10mg/20mg), a bioequivalent generic version of Lotrel® Capsules*, in the US market on April 23, 2010. In September 2009, Dr. Reddy’s had entered into a patent settlement with Novartis on amlodipine benazepril stipulating the dismissal of the lawsuits in the United States. The United States Food & Drug Administration (USFDA) granted an approval of Dr. Reddy’s ANDA for amlodipine benazepril on April 15, 2010. Dr. Reddy’s product is available in bottles of 100 count capsules.
*Lotrel® is a registered trademark of Novartis Pharma, US.


Introduces ‘Dose Counter Inhalers’ for the first time in India
We introduced an innovation in the Metered Dose Inhaler space with launch of ‘Dose Counter Inhalers’ (DCI) for the first time in India. This is the first Metered Dose Inhaler in India that gives patients an advance indication of when the Inhaler is going to be empty. The device also includes a retractable mouth piece and a child lock facility and comes with a “Universal Adapter” that can be fitted with available spacers. Dose Counter Inhalers is a new drug delivery device with a single device having 120 metered doses.

Announced the Launch of Tacrolimus Capsules
Dr. Reddy’s announced the launch of tacrolimus capsules, (0.5mg, 1mg, 5mg), a bioequivalent generic version of Prograf® Capsules*, in the US market on May 20, 2010. The United States Food & Drug Administration (USFDA) granted an approval of Dr. Reddy’s ANDA for tacrolimus capsules on May 13, 2010. Dr. Reddy’s product is available in bottles of 100 count capsules.
*®Prograf is a registered trademark of Astellas Pharma US, Inc.

Announced the launch of Anastrozole 1mg tablets
Dr. Reddy’s announced the launch of anastrozole tablets, (1mg), a bioequivelant generic version of Arimidex® (anastrozole tablets) in the US market on 28 June 2010. Dr. Reddy’s product is available in 30 count bottles.
*ARIMIDEX is a registered trademark of the AstraZeneca group of companies.

Provided update on the fexofenadine - pseudoephedrine 24 hour preliminary injunction hearing
Dr. Reddy’s announced that the U.S. District Court of New Jersey had granted sanofi-aventis and Albany Molecular Research’s motion for a Preliminary Injunction. The motion was related to Dr. Reddy’s abbreviated new drug application to market its generic version of Allegra D24®* (fexofenadine hydrochloride / pseudoephedrine hydrochloride 180 mg / 240 mg extended release tablet).
*®Allegra D24 is a registered trademark of sanofi-aventis.

During the quarter, Dr. Reddy’s transferred dossiers and trademarks for nine currently marketed products in Brazil to GSK, for a consideration of $4 million. The agreement also provides for additional consideration towards other products in the pipeline based on specified milestones. The milestone payments under this deal will be recognized as revenue over the term of the product supply agreement.

Dr. Reddy’s named ‘BEST COMPANY TO WORK FOR’ in Biotech/ Pharma Industry
Our company has been ranked the Best Company to work for in the biotech/ pharmaceutical industry in India for the third consecutive year in ‘India’s Best Companies to Work For’ - 2010 list produced by Great Place to Work® Institute in association with The Economic Times. Over 640 Organizations and 180,000 employees were covered in this survey.

Infrastructure and Capabilities
Pharmaceutical Services & Active Ingredients
6 FDA-approved plants in India 1 Cytotoxic facility 1 FDA-approved plant in Mexico 1 FDA-approved plant in Mirfield, UK 3 Technology development centers (2 in Hyderabad, India; 1 in Cambridge, UK)

Product Development
Integrated Product development Capabilities that includes API development, Formulations development and analytical development skills. One Integrated Product development facility in Hyderbad, India.




New Chemical Entities (NCEs) Global Generics
6 Formulation plants in India (1 USFDA inspected) 1 USFDA inspected plant in USA Research in the areas of metabolic, cardiovascular, anti-bacterials, and pain & inflammation.

Biologics development center GMP production E coli and mammalian cell platforms

General Information
About Dr. Reddy’s



Established in 1984, Dr. Reddy’s Laboratories (NYSE: RDY) is an emerging global pharmaceutical company. As a fully integrated pharmaceutical company, our purpose is to provide affordable and innovative medicines through our three core businesses of: - Pharmaceutical Services and Active Ingredients: comprising of Active Pharmaceutical Ingredients and Custom Pharmaceutical Services - Global Generics, which includes branded and unbranded generics - Proprietary Products, which includes New Chemical Entities (NCEs), Differentiated Formulations, and Generic Biopharmaceuticals. Our products are marketed globally, with a focus on India, US, Europe and Russia. Dr. Reddy’s conducts NCE research in the areas of bacterial infections, metabolic disorders, and pain/inflammation.

Safe Harbor
This presentation contains forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical fact, including, but not limited to, those that are identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects” and similar expressions. Risks and uncertainties that could affect us include, without limitation: General economic and business conditions in India The ability to successfully implement our strategy, our research and development efforts, growth and expansion plans and technological changes Changes in the value of the Rupee and other currency changes Changes in the Indian and international interest rates Allocations of funds by the Government Changes in laws and regulations that apply to our customers, suppliers, and the pharmaceutical industry Increasing competition in and the conditions of our customers, suppliers and the pharmaceutical industry Changes in political conditions in India Should one or more of such risks and uncertainties materialize, or should any underlying assumption prove incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking statements. Any forwardlooking statement or information contained in this presentation speaks only as of the date of the statement. We are not required to update any such statement or information to either reflect events or circumstances that occur after the date the statement or information is made or to account for unanticipated events.

Contact Information
Media Relations
Rajan S

Investor Relations
Kedar Upadhyay Ph: +91-40-66834297 Fax: +91-40-23731955 Email: kedaru@drreddys.com
Raghavender R

Ph: +91-40-66511725 Email: rajans@drreddys.com

Ph: +91-40-66511529 Email: raghavenderr@drreddys.com
Milan Kalawadia

Ph: +1 - 9082034931 Email: mkalawadia@drreddys.com

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