[October 25, 2016] |
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Dr. Reddy's Q2 and H1 FY17 Financial Results
Dr. Reddy's Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY)
today announced its consolidated financial results for the second
quarter and half year ended September 30, 2016 under International
Financial Reporting Standards (IFRS).
Q2 FY17: Key Highlights
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Revenues at Rs. 35.9 billion: QoQ growth: 11%
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Gross Profit Margin at 56.0%. Lower by ~530 bps versus the same
quarter last year
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Research & Development (R&D) spend at Rs. 5.2 billion. [14.5% of
Revenues]
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Selling, general & administrative (SG&A) expenses at Rs. 11.8 billion
[YoY increase: 6%]
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Includes NPPA provision of Rs. 344 million, explained in details
in the note
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EBITDA at Rs. 6.4 billion [17.9% of Revenues]
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Profit after tax at Rs. 2.9 billion [8.2% of Revenues]
H1 FY17: Key Highlights
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Revenues at Rs. 68.2 billion
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Gross Profit Margin at 56.1%. Lower by ~510 bps versus H1 FY16
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Research & Development (R&D) spend at Rs. 10.0 billion. [14.7% of
Revenues]
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Selling, general & administrative (SG&A) expenses at Rs. 24.1 billion
[YoY increase: 9%]
-
EBITDA at Rs. 10.4 billion [15.2% of Revenues]
-
Profit after tax at Rs. 4.2 billion [6.2% of Revenues]
Commenting on the results, Co-chairman and CEO, G V Prasad said, "All
our major businesses have shown sequential improvement over the previous
quarter with revenues growing by 11% and EBITDA by 61%. We have
made considerable progress in our remediation efforts and continue to
work on addressing the concerns of the regulators. Looking ahead we will
continue to focus on launching new products in our generics business,
improving productivity and strengthening our quality management systems."
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All amounts in millions, except EPS
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All US dollar amounts based on convenience translation rate of
1 USD = Rs. 66.58
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Dr. Reddy's Laboratories Limited and Subsidiaries
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Consolidated Income Statement
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Particulars
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Q2 FY 17
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Q2 FY 16
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Growth %
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($)
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(Rs.)
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%
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($)
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(Rs.)
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%
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Revenues
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539
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35,857
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100.0
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599
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39,889
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100.0
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(10)
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Cost of revenues
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237
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15,760
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44.0
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232
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15,421
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38.7
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2
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Gross profit
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302
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20,097
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56.0
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368
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24,468
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61.3
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(18)
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Operating Expenses
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Selling, general & administrative expenses
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177
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11,774
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32.8
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166
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11,058
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27.7
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6
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Research and development expenses
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78
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5,214
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14.5
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67
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4,473
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11.2
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17
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Other operating expense / (income)
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(4)
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(277)
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(0.8)
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(5)
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(320)
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(0.8)
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(13)
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Results from operating activities
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51
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3,386
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9.4
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139
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9,257
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23.2
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(63)
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Finance expense / (income), net
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(5)
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(365)
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(1.0)
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3
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216
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0.5
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(269)
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Share of (profit) of equity accounted investees, net of income tax
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(1)
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(84)
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(0.2)
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(1)
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(57)
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(0.1)
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49
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Profit before income tax
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58
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3,835
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10.7
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137
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9,098
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22.8
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(58)
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Income tax expense
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13
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885
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2.5
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28
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1,880
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4.7
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(53)
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Profit for the period
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44
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2,950
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8.2
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108
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7,218
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18.1
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(59)
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Diluted EPS
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0.27
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17.76
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0.63
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42.20
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(58)
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EBITDA Computation
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Particulars
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Q2 FY 17
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Q2 FY 16
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($)
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(Rs.)
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($)
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(Rs.)
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Profit before income tax
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58
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3,835
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137
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9,098
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Interest (income) / expense net*
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(5)
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(329)
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(3)
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(172)
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Depreciation
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28
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1,897
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24
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1,606
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Amortization
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14
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950
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13
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860
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Impairment
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1
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67
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-
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-
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EBITDA
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96
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6,420
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171
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11,392
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EBITDA (% to sales)
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17.9
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28.6
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* - Includes income from Investments
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Key Balance Sheet Items
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Particulars
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As on 30th Sep 16
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As on 30th June 16
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($)
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(Rs.)
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($)
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(Rs.)
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Cash and cash equivalents and Other current Investments
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321
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21,379
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384
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25,578
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Trade receivables
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555
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36,939
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533
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35,499
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Inventories
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428
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28,516
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419
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27,922
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Property, plant and equipment
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842
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56,052
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825
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54,951
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Goodwill and Other Intangible assets
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762
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50,766
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425
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28,284
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Loans and borrowings (current & non-current)
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908
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60,480
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565
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37,632
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Trade payables
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184
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12,281
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191
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12,723
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Equity
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1,731
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1,15,264
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1,714
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1,14,112
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All amounts in millions, except EPS
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All US dollar amounts based on convenience translation rate of
1 USD = Rs. 66.58
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Revenue Mix by Segment [Year on year]
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Particulars
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Q2 FY 17
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Q2 FY 16
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Growth %
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($)
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(Rs.)
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%
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($)
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(Rs.)
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%
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Global Generics
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435
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28,995
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81
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492
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32,768
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82
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-12
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North America
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16,134
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18,563
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-13
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Europe*
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1,776
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2,124
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-16
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India
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6,251
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5,464
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14
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Emerging Markets#
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4,834
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6,617
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-27
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PSAI
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87
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5,784
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16
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89
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5,918
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15
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-2
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North America
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1,135
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692
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64
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Europe
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2,095
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2,426
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-14
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India
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575
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724
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-21
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Rest of World
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1,979
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2,076
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-5
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Proprietary Products & Others
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16
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1,078
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3
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18
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1,203
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3
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-10
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Total
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539
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35,857
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100
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599
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39,889
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100
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-10
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Revenue Mix by Segment [Sequential]
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Particulars
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Q2 FY 17
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Q1 FY 17
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Growth %
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($)
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(Rs.)
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%
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($)
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(Rs.)
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%
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Global Generics
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435
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28,995
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81
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400
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26,638
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82
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9%
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North America
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16,134
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15,523
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4%
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Europe*
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1,776
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1,615
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10%
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India
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6,251
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5,223
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20%
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Emerging Markets#
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4,834
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4,277
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13%
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PSAI
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87
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5,784
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16
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70
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4,692
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15
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23%
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North America
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1,135
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643
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77%
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Europe
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2,095
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1,947
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8%
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India
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575
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372
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55%
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Rest of World
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1,979
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1,730
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14%
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Proprietary Products & Others
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16
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1,078
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3
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|
15
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1,015
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3
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6%
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Total
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539
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35,857
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100
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|
486
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32,345
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100
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11%
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* Europe primarily includes Germany, UK and out licensing
sales business
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# Emerging Markets refers to Russia, other CIS countries,
Romania and Rest of the World markets including Venezuela
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Segmental Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 29.0 billion, year-on-year
decline of 12%; decline primarily on account of lower contribution from
North America and loss of sales from Venezuela. However, all the
businesses have grown sequentially.
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Revenues from North America at Rs. 16.1 billion. Year-on-year
decline of 13% is primarily on account of increased competition in
valgancyclovir and injectable franchise, coupled with pricing pressure
and moderation in volumes off-take.
During the quarter we
launched 4 new products, i.e. omeprazole sodium bi-carbonate,
nitroglycerin SLT, paricalcitol injection and bupropion SR.
As
of 30th September 2016, cumulatively 85 generic filings are
pending for approval with the USFDA (83 ANDAs and 2 NDAs under
505(b)(2) route). Of these 83 ANDAs, 56 are Para IVs out of which we
believe 19 have 'First to File' status. Further, these 83 ANDAs
include 7 ANDAs, acquired from Teva, of which 6 are Para IVs.
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Revenues from Emerging Markets at Rs. 4.8 billion, year-on-year
decline of 27%. [Ex-Venezuela: decline of 9%]
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Revenues from Russia at Rs. 2.7 billion, year-on-year
decline of 8%. In constant currency it declined 5%. Normalizing
for the base effect, the year-on-year H1 growth is 7%.
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Revenues from other CIS countries and Romania market at Rs.
0.9 billion, year-on-year decline of 11%.
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Revenues from Rest of World (RoW) territories at Rs. 1.3
billion, year-on-year decline of 53% primarily on account of no
sales in Venezuela.
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Revenues from India at Rs. 6.3 billion,
year-on-year growth: 14%.
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Revenues from Europe at Rs. 1.8 billion, year-on-year decline:
16%.
Pharmaceutical Services and Active Ingredients (PSAI)
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Revenues from PSAI at Rs. 5.8 billion, year-on-year decline of
2%. On a sequential basis revenues registered a growth of 23% aided by
improved order flow and supply situations
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During the quarter, 15 DMFs were filed globally of which 3 were in the
US. The cumulative number of DMF filings as of 30th
September, 2016 was 797.
Proprietary Products (PP)
Zembrace™ SymTouch™ (Suma 3 mg) injection and Sernivo™ (betamethasone
dipropionate) Spray, 0.05% are gradually gaining traction.
Income Statement Highlights:
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Gross profit margin at 56.0% and declined by ~530 bps over that of
previous year, primarily on account of lower sales due to increased
competitive intensity in some of our key molecules in the US. Gross
profit margin for GG and PSAI business segments are at 62.3% and 22.0%
respectively.
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SG&A expenses at Rs. 11.8 billion, year-on-year increase of 6%.
Given
the Bombay High Court's dismissal of the writ petition filed by the
IPA (Indian Pharmaceutical Alliance) regarding price controls by the
NPPA (National Pharmaceutical Pricing Authority), the Company has
accrued a potential liability of Rs. 344 million during the quarter.
The
net increase, adjusted for the above NPPA provision, 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.
The sequential decline, adjusted for the above
NPPA provision, is primarily on account of the reduced (a) remediation
related costs and (b) launch spends by PP in the first quarter.
-
Research & development expenses at Rs. 5.2 billion. As a % to
Revenues- Q2 FY17:14.5% | Q1 FY17: 14.8% | Q2 FY16: 11.2%. Current
quarter also includes some spend towards the IPR&D assets in-licensed
from Xenoport and Eisai. Continued focus on building complex generics,
biosimilars and differentiated products pipeline.
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Net Finance income at Rs. 365 million compared to the net finance
expense of Rs. 216 million in Q2 FY16. The incremental benefit of Rs.
581 million is on account of:
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Net foreign exchange gain of Rs. 37 million in the current quarter
vs net foreign exchange loss of Rs. 388 million in the previous
year
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Increase in profit on sales of investments by Rs. 276 million.
-
Net increase in interest expense of Rs. 118 million.
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Profit after Tax at Rs. 2.9 billion
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Diluted earnings per share is at Rs. 17.8
-
Capital expenditure is at Rs. 3.1 billion.
Earnings Call Details (06:30 pm IST, 09:00 am EDT, October 25, 2016)
The Company will host an earnings call to discuss the performance and
answer any questions from participants. This call will be accessible
through an audio dial-in and a web-cast.
Audio conference Participants can dial-in on the numbers below
Primary number:
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91 22 3960 0616
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Secondary number:
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91 22 6746 5826
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International Toll Free Number
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USA
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18667462133
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UK
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08081011573
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Singapore
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8001012045
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Hong Kong
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800964448
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Playback of call:
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91 22 3065 2322, 91 22 6181 3322
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Conference ID:
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375#
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Web-cast
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More details will be provided through our website, www.drreddys.com
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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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161025005846/en/
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