Dr. Reddy’s third quarter revenues increase 46% to $522 million

Dr. Reddy's Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended December 31, 2011 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Launch of olanzapine 20 mg (generic version of Eli Lilly's Zyprexa® 20 mg) in the US, another key milestone in consistently delivering limited competition opportunities
  • Revenues for Q3 FY12 at Rs 27.7 billion ($522 million), YoY growth of 46%
    • Revenues for nine months FY12 at Rs 70.2 billion ($1.3 billion), YoY growth of 29%
  • EBITDA for Q3 FY12 at Rs 9.2 billion ($174 million), 33% to sales, YoY growth of 127%
    • EBITDA for nine months FY12 at Rs 18.6 billion ($351 million), 27% to sales, YoY growth of 59%
  • Adjusted PAT for Q3 FY12 at Rs 5.2 billion ($98 million), YoY growth of 91%
    • Adjusted PAT for nine months FY12 at Rs 11.1 billion ($209 million), YoY growth of 44%
  • Q3 FY12 - 33 new generic launches, 16 new generic filings and 7 DMF filings

Segmental Analysis

Global Generics: North America

Revenues from North America were at Rs 11.1 billion in Q3 FY12 versus Rs 4.8 billion in Q3 FY11. Growth was led by the high value launch of olanzapine 20 mg, new products launched in the last twelve months and strong volume growth across key products.

  • 2 new products launched during the quarter - olanzapine 20 mg and olanzapine ODT.
  • Strong volume growth contributed by key products such as lansoprazole, tacrolimus, omeprazole Mg OTC and Shreveport products and last twelve months new launches of fondaparinux and antibiotics portfolio.
  • 26 prescription products feature among the Top 3 in market share (Source: IMS Volumes November 2011).
  • During the quarter, 3 ANDAs were filed. The cumulative ANDA filings as of 31st December, 2011 are 187. A total of 79 ANDAs are pending for approval with the USFDA of which 40 are Para IVs and 10 are FTFs.

Global Generics: Russia & Other CIS

Revenues in Russia & Other CIS markets were at Rs 3.3 billion in Q3 FY12 versus Rs 2.9 billion in Q3 FY11.

  • Revenues in Russia were at Rs 2.8 billion in Q3 FY12.
    • The company's secondary sales growth at 23% continued to outperform industry's growth of 19%. (Source: Pharmexpert Prescription Sales November 2011).
    • Top 5 products feature among Top 2 ranks in market share.
    • OTC portfolio grew by 24% over previous year.
  • Revenues in Other CIS markets were at Rs 557 million in Q3 FY12; year-on-year growth driven largely by Ukraine and Kazakhstan.

Global Generics: India

Revenues in India were at Rs 3.3 billion in Q3 FY12 versus Rs 3.0 billion in Q3 FY11, driven by volume increase in key products and new product launches in the last twelve months.

  • 6 new products launched during the quarter.
  • Biosimilars portfolio grew by 25% over previous year.

Global Generics: Europe

Revenues from Europe were at Rs 2.4 billion in Q3 FY12 versus Rs 2.1 billion in Q3 FY11.

  • Revenues from Germany were at Rs 1.5 billion in Q3 FY12. Growth in new product launches outside the scope of tender was offset by price erosion in products within tenders.
  • Revenues from Rest of Europe were at Rs 881 million.

Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI were at Rs 5.6 billion in Q3 FY12 versus Rs 5.0 billion in Q3 FY11. Growth was largely driven by Pharmaceutical Services segment and benefit of rupee depreciation.

  • During the quarter, 7 DMFs were filed globally including 2 in US, 2 in Europe and 3 in rest of the markets. The cumulative DMF filings as of 31st December 2011 are 513 globally.

Income Statement Highlights:

  • Gross profit margin 60% to revenues in Q3 FY12, increased largely on account of a favorable mix of high margin olanzapine revenues and benefit of rupee depreciation.
  • Selling, General & Administration (SG&A) expenses including amortization at Rs 7.7 billion ($145 million) increased by 20% over Q3 FY11. This increase is on account of higher manpower and freight costs and the effect of rupee depreciation against multiple currencies.
  • Net Finance income at Rs 174 million ($3 million) in Q3 FY12 versus net Finance cost of Rs 49 million ($1 million) in Q3 FY11. The change is on account of:
    • Net forex gain of Rs 285 million ($5 million) in Q3 FY12 versus net forex loss of Rs 45 million ($1 million) in Q3 FY11.
    • Net interest expense of Rs 155 million ($3 million) in Q3 FY12 versus Rs 98 million ($2 million) in Q3 FY11.
    • Profit on sale of investments of Rs 44 million ($1 million) in Q3 FY12 versus Rs 4 million in Q3 FY11.
  • EBITDA of Rs 9.2 billion ($174 million) in Q3 FY12, represents 33% of revenues and recorded a year-on-year growth of 127%. EBITDA of Rs 18.6 billion ($351 million) for nine months ended December 2011, represents 27% of revenues and recorded a year-on-year growth of 59%.
  • Profit after Tax adjusted for interest on bonus debentures (net of tax), was at Rs 5.2 billion ($98 million) in Q3 FY12, 19% of revenues and year-on-year growth of 91%. Adjusted PAT for nine months ended December 2011 was Rs 11.1 billion ($209 million) and recorded year-on-year growth of 44%.
  • Adjusted EPS for Q3 FY12 was Rs 30.6 ($0.6) versus Rs 16.1 ($0.3) in Q3 FY11. Adjusted EPS for nine months ended December 2011 was Rs 65.1 ($1.2).
  • Capital expenditure for nine months ended December 2011, was Rs 5.0 billion ($94 million).

Source: Dr. Reddy's Laboratories Ltd.

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