Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter and nine months ended December 31, 2014 under International Financial Reporting Standards (IFRS).
Key Highlights (Q3 FY15)
- Consolidated revenues at Rs. 38.4 billion, year-on-year growth of
9%.
- Revenues from the Global Generics (GG) segment at Rs. 31.7 billion, YoY growth of 8%.
- Revenues from the Pharmaceutical Services and Active Ingredients (PSAI) segment at Rs. 6.1 billion. YoY growth of 21%.
- Gross Profit Margin at 58.2% in Q3 FY15 versus 60.5% as in Q3 FY14.
- Research & Development (R&D) expenses at Rs. 4.3 billion, 11.2% to revenues versus 8.4% to revenues as in Q3 FY14.
- Selling, general & administrative (SG&A) expenses at Rs. 11.2 billion, 29.0% to revenues.
- EBITDA at Rs. 10.5 billion, 27% to revenues.
- Profit after tax at Rs. 5.7 billion, 15% to revenues.
- During the quarter the company launched 13 new generic products, filed 18 new product registrations and 14 DMFs globally.
During the quarter, the Company completed the acquisition of Habitrol® franchise (an over-the-counter nicotine replacement therapy transdermal patch) from Novartis Consumer Health Inc. and began marketing the product in the U.S. Total consideration paid was U.S. $80 million.
All amounts in millions, except EPS | ||||||||||||||||||||||||||||
All US dollar amounts based on convenience translation rate of 1 USD = Rs. 63.04 | ||||||||||||||||||||||||||||
Dr. Reddy’s Laboratories Limited and Subsidiaries | ||||||||||||||||||||||||||||
Unaudited Consolidated Income Statement | ||||||||||||||||||||||||||||
Particulars | Q3 FY15 | Q3 FY14 | Growth % | |||||||||||||||||||||||||
($) | (Rs.) | % | ($) | (Rs.) | % | |||||||||||||||||||||||
Revenues | 610 | 38,431 | 100 | 561 | 35,338 | 100 | 9 | |||||||||||||||||||||
Cost of revenues | 255 | 16,079 | 41.8 | 221 | 13,946 | 39.5 | 15 | |||||||||||||||||||||
Gross profit | 355 | 22,352 | 58.2 | 339 | 21,391 | 60.5 | 4 | |||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||
Selling, general & administrative expenses | 177 | 11,151 | 29.0 | 158 | 9,945 | 28.1 | 12 | |||||||||||||||||||||
Research and development expenses | 68 | 4,316 | 11.2 | 47 | 2,979 | 8.4 | 45 | |||||||||||||||||||||
Other (income)/expense, net | (5 | ) | (341 | ) | (0.9 | ) | (3 | ) | (177 | ) | (0.5 | ) | 93 | |||||||||||||||
Results from operating activities | 115 | 7,226 | 18.8 | 137 | 8,644 | 24.5 | (16 | ) | ||||||||||||||||||||
Finance (expense)/income, net | 16 | 1,013 | 2.6 | 0 | 15 | 0 | ||||||||||||||||||||||
Share of profit of equity accounted investees, net of tax | 1 | 47 | 0.1 | 1 | 46 | 0.1 | 0 | |||||||||||||||||||||
Profit before tax | 131 | 8,286 | 21.6 | 138 | 8,705 | 24.6 | (5 | ) | ||||||||||||||||||||
Tax expense | 40 | 2,541 | 6.6 | 40 | 2,521 | 7.1 | 1 | |||||||||||||||||||||
Profit for the period | 91 | 5,745 | 15 | 98 | 6,184 | 17.5 | (7 | ) | ||||||||||||||||||||
Diluted Earnings Per Share (EPS) | 0.53 | 33.61 | 0.57 | 36.25 | (7 | ) | ||||||||||||||||||||||
EBITDA Computation | ||||||||||||||||
Particulars | Q3 FY15 | Q3 FY14 | ||||||||||||||
($) | (Rs.) | ($) | (Rs.) | |||||||||||||
Profit before tax | 131 | 8,286 | 138 | 8,705 | ||||||||||||
Interest (income) / expense net* | (5 | ) | (347 | ) | 1 | 48 | ||||||||||
Depreciation | 23 | 1,462 | 19 | 1,208 | ||||||||||||
Amortization | 9 | 579 | 9 | 586 | ||||||||||||
Impairment / (reversal of impairment) adjustment | 8 | 534 | (8 | ) | (497 | ) | ||||||||||
EBITDA | 167 | 10,515 | 159 | 10,049 | ||||||||||||
EBITDA (% to sales) | 27.3 | 28.4 | ||||||||||||||
* includes profit of sales of investments | ||||||||||||||||
All US dollar amounts based on convenience translation rate of 1 USD = Rs. 63.04
Segmental Analysis
Global Generics
Revenues are at Rs. 31.7 billion, year-on-year growth of 8%, primarily driven by Branded Markets.
-
Revenues from North America at Rs. 16.8 billion, year-on-year
growth of 4%. Sequential growth in constant currency at 17%, primarily
on account of:
- Sustained performance of FY14 ‘limited competition’ launches, namely decitabine, azacitidine, and divalproex sodium ER.
- Progress on market share expansion of key molecules, namely ziprasidone, amlodipine-atorvastatin and sumatriptan auto injector.
- 6 new products launched during the quarter.
- 2 ANDA filings during the quarter. Cumulatively, 68 ANDAs are pending for approval with the USFDA of which 43 are Para IVs, and we believe 13 to have ‘First To File’ status.
-
Revenues from Emerging Markets at Rs. 8.6 billion, year-on-year
growth of 16%.
- Revenues from Russia at Rs. 4.0 billion, year-on-year decline of 9% primarily on account of the Rouble depreciation. In constant currency, the growth is ~27% on the back of healthy sales.
- Emerging Markets, Ex-Russia at Rs. 4.6 billion recorded year-on-year growth of 51% primarily driven by strong performance in Venezuela on the back of continued volume upsides.
-
Revenues from India for at Rs. 4.3 billion,
year-on-year growth of 11%.
- Growth is driven by continued focus on new product launches and prescription growth.
Pharmaceutical Services and Active Ingredients (PSAI)
- Revenues from PSAI at Rs. 6.1 billion, year-on-year growth of 21%.
- During the quarter 14 DMFs were filed globally, filed 9 in the ROW and 5 in Europe. The cumulative number of DMF filings as of December 31, 2014 is 720.
Income Statement Highlights:
- Gross profit margin at 58.2% registered ~230 basis points decline vs Q3 FY14 primarily on account of unfavourable currency impact. Gross profit margin for GG and PSAI business segments are at 65.9% and 17.2% respectively.
- SG&A expenses, excluding impairment adjustments, marginally grew by 2%. This increase is largely due to annual increments, additional manpower deployment in the past 12 months and other sales and marketing spend for events specific to this quarter offset by the favourable impact of Emerging Market currency depreciation.
- R&D expenses at Rs. 4.3 billion, year-on-year growth of 45%. 11.2% of revenues in Q3 FY15 as compared to 8.4% of revenues in Q3 FY14. The increase is in line with our planned scale-up in development activities.
- Consequent to the decline in the recoverable amounts of certain product / customer contracts related intangible assets, an impairment charge of Rs. 534 million was recorded during the quarter.
-
Net Finance income at Rs. 1,013 million compared to Rs. 15 million in
Q3 FY14. The increase is on account of:
- Incremental forex benefit of Rs. 604 million
- Incremental profit on sales of investments of Rs. 174 million
- Net increase in interest income of Rs. 221 million
- EBITDA at Rs. 10.5 billion, year-on-year growth of 5%; 27% of revenues.
- Profit after Tax at Rs. 5.7 billion, year-on-year decline of 7%; 15% of revenues.
- Diluted earnings per share in Q3 FY15 at Rs. 33.61
- Capital expenditure for Q3 FY15 is Rs. 2.65 billion.
Appendix 1: Key Balance Sheet Items | ||||||||||||||
Particulars | As on 31st Dec 14 | As on 30th Sep 14 | ||||||||||||
($) | (Rs.) | ($) | (Rs.) | |||||||||||
Cash and cash equivalents and Other current investments | 456 | 28,736 | 456 | 28,737 | ||||||||||
Trade receivables | 638 | 40,224 | 598 | 37,722 | ||||||||||
Inventories | 461 | 29,038 | 446 | 28,123 | ||||||||||
Property, plant and equipment | 760 | 47,887 | 739 | 46,559 | ||||||||||
Goodwill and Other Intangible assets | 283 | 17,820 | 216 | 13,648 | ||||||||||
Loans and borrowings (current & non-current) | 629 | 39,656 | 616 | 38,854 | ||||||||||
Trade payables | 196 | 12,333 | 204 | 12,843 | ||||||||||
Equity | 1,667 | 105,107 | 1,570 | 99,004 | ||||||||||
Appendix 2: Revenue Mix by Segment | ||||||||||||||||||||||||
Particulars | Q3 FY15 | Q3 FY14 | Growth % | |||||||||||||||||||||
($) | (Rs.) | % | ($) | (Rs.) | % | |||||||||||||||||||
Global Generics | 503 | 31,692 | 82 | 466 | 29,396 | 83 | 8 | |||||||||||||||||
North America | 16,819 | 53 | 16,223 | 55 | 4 | |||||||||||||||||||
Europe | 1,947 | 6 | 1,862 | 6 | 5 | |||||||||||||||||||
India | 4,328 | 14 | 3,913 | 13 | 11 | |||||||||||||||||||
Russia & Other CIS | 4,766 | 15 | 5,296 | 18 | (10 | ) | ||||||||||||||||||
Rest of World | 3,832 | 12 | 2,102 | 7 | 82 | |||||||||||||||||||
PSAI | 97 | 6,112 | 16 | 80 | 5,062 | 14 | 21 | |||||||||||||||||
North America | 1,360 | 22 | 780 | 15 | 74 | |||||||||||||||||||
Europe | 2,055 | 34 | 1,948 | 38 | 5 | |||||||||||||||||||
India | 948 | 16 | 945 | 19 | 0 | |||||||||||||||||||
Rest of World | 1,749 | 29 | 1,388 | 27 | 26 | |||||||||||||||||||
Proprietary Products & Others | 10 | 626 | 2 | 14 | 880 | 2 | (29 | ) | ||||||||||||||||
Total | 610 | 38,431 | 100 | 561 | 35,338 | 100 | 9 | |||||||||||||||||
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.
About Dr. Reddy's
Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services and 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. Major therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management and anti-infective. Major markets include India, USA, Russia-CIS and Europe apart from other select geographies within Emerging Markets.
For more information, log on to: www.drreddys.com
Note: All discussions in this release are based on unaudited consolidated IFRS financials.
Contacts:
Investors and Financial
Analysts:
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kedaru@drreddys.com
or
Saunak
Savla, +91-40-49002135
saunaks@drreddys.com
or
Ashish
Girotra (USA), +1 609-375-9805
ashishg@drreddys.com
or
Media:
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Lathia, +91-40-49002447
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