Dr Reddy’s Laboratories declared the results for the quarter ended December’08 and held a tele conference call on 20th January 2009 to discuss the same and its future growth strategies. The key takeaways from the meet are as follows:
Financial Performance
The consolidated total operating income reported growth of 49% to Rs 1846.32 crore for the quarter ended December’08. The growth was mainly powered by the successful launch of the authorized generic version of GalxoSmithKline’s Imitrex (i.e. Sumatriptan) in late November 2008. Operating profit margins expanded by 690 bps to 21.4% due to higher margins on the Sumatriptan. Resultantly, Operating profit leaped by 120% to Rs 395.77 crore. The company has incurred forex loss of Rs 49.30 crore as against of forex gain of Rs 8.70 crore in the corresponding pervious period, PBT after forex loss reported growth of 102% to Rs 204.36 crore. As the effective tax rate declined by 1630 bps to 22.1% and minority interest reported nil compared to Rs 0.29 crore in the corresponding pervious period, the net profit reported robust growth of 156% to Rs 159.16 crore.
Other Highlights
- Capex for the quarter under review stood at Rs 122 crore.
- R & D investment at 6% of total revenues in Q3 FY’09 as against 7% in Q3 FY’08
- Amortization expenses at Rs 33.90 crore in Q3 FY’09 as against Rs 37.50 crore in Q3 FY’08. This reduction is on account of lower intangible base of betapharm due to the accelerated impairment charge taken in Q3 FY08.
- In the quarter, the company launched 26 new generic products, files 32 new generic product registrations and filed 6 DMF’s globally.
- The domestic formulation business remains flat at Rs 196.70 crore in the quarter review due to delay in launch of new products and a change in company supply chain model to a replenishment based model.
- Dr Reddys is not maintaining excess inventory of Sumatriptan.
- Excluding revenues from Sumatriptan, the YoY growth is at 21%.
- Revenue from the business & Facility acquired from Dow Pharma at Rs 22.4 crore in Q3 FY’09
- Revenues from Pharmaceutical Services & Active ingredients (PSAI) increased by 6% to Rs 445.7 crore.
- Cash on the books as on 31st December 08 is Rs 378.30 crore.
- Inventories as on 31st December’08 is Rs 151.57 crore
- Net debt on the books as on 31st December’08 USD 380 million
- Company received supply contract for 8 products in AOK tender
- Company has 19 – first to file with Para IV certificates, which have sales of USD 15 billion in US market.
- Company expects to launch atleast one first to file product per year over next five years.
- Effective tax for the FY’09 is around 17%.
Global Generics
Revenues from Global Generics business stood at Rs 1368.30 crore, an increase of 70% over corresponding pervious period primarily driven by Sumatriptan and key markets of North America and Russia.
North America
Revenues from the region stood at Rs 665.2 crore as against Rs 172.5 crore in the corresponding pervious period.
- 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 is at Rs 40.9 crore in the quarter under review.
- 3 new products were launched in third quarter.
- During the quarter the company filed 5 ANDAs taking the total filings to 133. Total of 69 ANDAs were pending at the USFDA addressing innovator sales of USD 47 billion as per IMS December 2007.
Europe
Revenues form Europe region clocked at Rs 250.50 crore in the quarter under review as against Rs 255.80 crore in the corresponding pervious quarter.
- Revenues from betapharm marginally down by 2% to Rs 2.0 billion in the Q3 FY09. The decline was on account of destocking due to the AOK tender and olanzapine withdrawal from market.
- Betapharm volume growth of 15% as against market volume degrowth of 3.3%.
- Sales from rest of Europe are at Rs 50.1 crore in Q3 FY09 from Rs 50.0 crore in Q3 FY08.
- During the quarter the company launched 2 products and filed 4 dossiers across Europe.
Domestic Market
- Revenues from the domestic market remain flat at Rs 196.70 crore. The temporary slowdown in India is on account of delay in lauch 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 the quarter under review.
Russia & Other CIS markets
- Revenues in these markets rose by 33% to Rs 200.6 crore, mainly driven by the brands Nise, Ketorol and Cetrine.
- Combined revenues from OTC & Hospital segment contributed 26% to total revenues in the quarter under review.