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Dr. Reddy?s Q3 FY09 Revenue at Rs. 18,401 million, EBITDA at Rs. 3,453 million, PAT at Rs. 1,924 million

^{Published on 2009-01-20 04:27:16, Last Modified on 2009-01-20 04:30:17 - Market Wire}
 

HYDERABAD, India--([ BUSINESS WIRE ])--Dr. Reddy's Laboratories Ltd. (NYSE:RDY) today announced its unaudited financial results for the quarter ended December 31, 2008.

Q3 FY09 Key Highlights

• Overall revenues at Rs. 18.4 billion ($379 million) in Q3 FY09 as against Rs. 12.3 billion ($254 million) in Q3 FY08, representing a growth of 49%.
  • The growth was majorly driven by the successful launch of the authorized generic version of GlaxoSmithKline's Imitrex® (generic version: sumatriptan succinate), in late November 2008.
  • Excluding revenues from Sumatriptan, the YoY growth is at 21%.
• Operating income at Rs. 3 billion ($62 million) in Q3 FY09 as against Rs. 1.1 billion ($23 million) in Q3 FY08 after adjusting for the one-time write down of intangibles.
• EBITDA at Rs. 3.5 billion ($71 million) in Q3 FY09 as against Rs. 2.2 billion ($45 million) in Q3 FY08, representing a growth of 58%.
• PAT at Rs. 1.9 billion (10% of total revenues). This translates to a diluted EPS of Rs. 11.4 ($0.2) in Q3 FY09 representing a growth of 150% over Q3 FY08, after adjusting for the one-time write down of intangibles.
• Revenues from Global Generics business at Rs. 13.7 billion ($282 million)in Q3 FY09 as against Rs. 8.0 billion ($165 million) in Q3 FY08. YoY growth of 70% driven by sumatriptan and key markets of North America and Russia.
  • Excluding revenues from Sumatriptan, the growth of 80% in North America was driven by volume growth in key existing products and acquisition of the Shreveport facility.
  • Revenue growth of 44% in Russia driven by key brands of Omez, Nise, Ketorol and Cetrine.
• Revenues from Pharmaceutical Services & Active Ingredients (PSAI) increase by 6% to Rs. 4.5 billion ($92 million) in Q3 FY09 as against Rs. 4.2 billion ($87 million) in Q3 FY08.
• During the quarter, the company launched 26 new generic products, filed 32 new generic product registrations and filed 6 DMFs globally.

Notes:

(a) Includes forex gain of Rs. 87 million in Q3 FY08.

(b) Includes forex loss of Rs. 493 million in Q3 FY09.

Segmental Analysis

Global Generics

• Revenues from Global Generics business at Rs. 13.7 billion ($282 million) in Q3 FY09 as against Rs. 8.0 billion ($165 million) in Q3 FY08. YoY growth of 70% driven by launch of sumatriptan and the key markets of North America and Russia.
• Revenues from North America at Rs. 6.7 billion ($137 million) in Q3 FY09 as against Rs. 1.7 billion ($36 million) in Q3 FY08.
  • Excluding revenues from Sumatriptan, the growth of 80% in North America was driven by high volume growth in Top products and acquisition of Shreveport facility.
  • Revenue from Shreveport facility at Rs. 409 million ($8 million) in Q3 FY09.
  • 3 new products launched in Q3 FY09.
  • During the quarter, the Company filed 5 ANDAs taking the total filings to 133. Total of 69 ANDAs pending at the USFDA addressing innovator sales of $47 billion as per IMS December 2007.
• Revenues from Europe at Rs. 2.5 billion ($52 million) in Q3 FY09 as against Rs. 2.6 billion ($53 million) in Q3 FY08.
  • Revenues from betapharm marginally down by 2% to Rs. 2.0 billion ($41 million) in Q3 FY09 from Rs. 2.0 billion ($42 million) in Q3 FY08. This decline was on account of destocking due to the AOK tender and olanzapine withdrawal from market.
    • Volume growth in existing products offset by price declines
    • Betapharm volume growth of 15% as against market volume degrowth of 3.3%.

    (Source: NVI Report Oct-Nov 2008)

  • Revenues from Rest of Europe at Rs. 501 million ($10 million) in Q3 FY09 from Rs. 500 million ($10 million) in Q3 FY08.
  • During the quarter, the company launched 2 new products and filed 4 dossiers across Europe.
• Revenues from Russia & Other CIS markets at Rs. 2.0 billion ($41 million) in Q3 FY09 as against Rs. 1.5 billion ($31 million) in Q3 FY08.
  • Revenues in Russia increase to Rs. 1.6 billion ($32 million) in Q3 FY09 as against Rs. 1.1 billion ($23 million) in Q3 FY08. YoY growth of 44% driven by key brands of Omez, Nise, Ketorol and Cetrine.
    • Dr. Reddy's volume growth at 16% as against the industry volume degrowth of 1%.

    (Source: Pharmexpert Apr-Nov 08)

    • Combined revenues from OTC & Hospital segment contribute 26% to total revenues.
  • Revenues in Other CIS markets increase to Rs. 434 million ($9 million) in Q3 FY09 as against Rs. 409 million ($8 million) in Q3 FY08. YoY growth of 6%.
• Revenues in India remained flat at Rs. 2.0 billion in Q3 FY09.
  • The temporary slowdown in India is on account of delay in launch of new products and a change in our supply chain model to a replenishment based model.
  • 10 new products launched during the quarter.
  • New products in the last 36 months contribute 23% to total revenues in Q3 FY09.

Pharmaceutical Services and Active Ingredients

• Revenues from this segment increase to Rs. 4.5 billion ($92 million) in Q3 FY09 as against Rs. 4.2 billion ($87 million) in Q3 FY08; YoY growth of 6% driven by growth in Europe and RoW markets.
  • Revenue from the business & facility acquired from Dow Pharma at Rs. 224 million ($5 million) in Q3 FY09.

Income Statement Highlights:

• Gross profit increase by 70% to Rs. 10.3 billion in Q3 FY09 as against Rs. 6.0 billion in Q3 FY08. Gross profit margins on total revenues at 56% as against 49% in Q3 FY08, largely driven by higher margins on sumatriptan.
• Selling, General & Administration (SG&A) expenses increase to Rs. 5.0 billion (27% of revenues) in Q3 FY09 from Rs. 3.7 billion in Q3 FY08 (30% of revenues).
  • The absolute increase YoY was majorly on account of impact of additional costs on account of the recent acquisitions and the scaling up of our Specialty business in the US.
  • Sequentially SG&A has increased. However if we were to exclude the impact of currency on expenses outside India, the base SG&A remains the same.
• Other operating expenses include provision of Rs. 969 million as damages on account of the German court upholding the validity of the olanzapine patent.
• R&D investments at 6% of total revenues in Q3 FY09 as against 7% in Q3 FY08.
• Amortization expenses at Rs. 339 million in Q3 FY09 as against Rs. 375 million in Q3 FY08. This reduction is on account of lower intangible base of betapharm due to the accelerated impairment charge taken in Q3 FY08.
• Finance costs (net) are at Rs. 699 million in Q3 FY09 as against Finance income (net) at Rs. 23 million in Q3 FY08. The increase is mainly on account of :
  • Net forex loss of Rs. 493 million in Q3 FY09 as against net forex gain of Rs. 87 million in Q3 FY08
  • Net interest expense of Rs. 215 million in Q3 FY09 as against net interest expense of Rs. 88 million in Q3 FY08.
• Net income at Rs. 1.9 billion (10% of total revenues). This translates to a diluted EPS of Rs. 11.4 ($0.2) in Q3 FY09, representing a growth of 150% over Q3 FY08, after adjusting the one-time write down of intangibles, net of tax.
• Capital expenditure for Q3 FY09 is at Rs. 1,220 million ($25 million).

General information

Prof. Krishna G. Palepu, non-executive Director on the Board of Directors has resigned from his position today. The Board has accepted his resignation with immediate effect. Commenting on Prof. Palepu's resignation from the Board, Dr. Anji Reddy, Chairman said that, "Krishna was an outstanding member on our Board, who brought in significant strategic perspective and independent thinking. His stepping down in the larger interests of the company reaffirms his commitment to Dr Reddy's."

About Dr. Reddy's

Established in 1984, Dr. Reddy's Laboratories (NYSE:RDY) is an emerging global pharmaceutical company with proven research capabilities. The Company is vertically integrated with a presence across the pharmaceutical value chain. It produces finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. The Company conducts research in the areas of cancer, diabetes, cardiovascular, inflammation and bacterial infection.

Disclaimer

This press release includes forward-looking statements, as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such factors include, but are not limited to, changes in local and global economic conditions, our ability to successfully implement our strategy, the market acceptance of and demand for our products, our growth and expansion, technological change and our exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future.

Notes

1. Financial discussions are on a consolidated basis as per IFRS.

2. Detailed analysis of the financials is available on the Company's website at [ www.drreddys.com ].