Dr. Reddy’s Q3 & 9M FY21 Financial Results

January 29, 2021 4:37 AM EST

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HYDERABAD, India--(BUSINESS WIRE)-- Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated financial results for the quarter and the nine months ended December 31, 2020. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).

Q3 Performance Summary

9M Performance Summary

 

 

Rs. 4,930 Cr

Rs. 14,244 Cr

Revenue

Revenue

[Up: 12% YoY; 1% QoQ]

[Up: 9% YoY]

 

 

53.8%

54.6%

Gross Margin

Gross Margin

[Q3 FY20: 54.1%; Q2 FY21: 53.9%]

[9M FY20: 54.7%]

 

 

Rs.1,439 Cr

Rs. 4,028 Cr

SGNA expenses

SGNA expenses

[Up: 14% YoY; 10% QoQ]

[Up: 6% YoY]

 

 

Rs. 411 Cr

Rs. 1,245 Cr

R&D expenses

R&D expenses

[8.3% of Revenues]

[8.7% of Revenues]

 

 

Rs. 1,185 Cr

Rs. 3,615 Cr

EBITDA

EBITDA

[24.0% of Revenues]

[25.4% of Revenues]

 

 

Rs. 284 Cr*

Rs. 2,025 Cr

Profit before Tax

Profit before Tax

[5.8% of Revenues]

[14.2% of Revenues]

 

 

Rs. 20 Cr**

Rs. 1,361 Cr

Profit after Tax

Profit after Tax

[0.4% of Revenues]

[9.6% of Revenues]

*Excluding the impairment charge in Q3 FY21, the Profit before Tax is Rs. 882 cr
**Q3 FY21 Profit after Tax was impacted primarily due to non-recognition of deferred tax asset on impairment

Commenting on the results, Co-chairman & MD, G V Prasad said, “We continued with our growth momentum while maintaining EBITDA margins. The profits were impacted due to trigger based impairment charge taken on a few acquired products including Nuvaring. We are progressing well on the phase 3 clinical trials for Sputnik V vaccine in India. We continue to focus on enhancing our product offerings to our patients to serve them better.”

All amounts in millions, except EPS. All US dollar amounts based on convenience translation rate of I USD = Rs. 73.01

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement

 

Particulars

Q3 FY21

Q3 FY20

YoY
Gr %

Q2 FY21

QoQ
Gr %

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Revenues

675

 

49,296

 

600

 

43,838

 

12

 

671

 

48,967

 

1

 

Cost of Revenues

312

 

22,758

 

276

 

20,116

 

13

 

309

 

22,558

 

1

 

Gross Profit

363

 

26,538

 

325

 

23,722

 

12

 

362

 

26,409

 

0

 

Operating Expenses

 

 

 

 

 

 

 

 

Selling, General & Administrative expenses

197

 

14,387

 

174

 

12,670

 

14

 

180

 

13,107

 

10

 

Research and Development expenses

56

 

4,108

 

54

 

3,949

 

4

 

60

 

4,359

 

(6

)

Impairment of non-current assets

82

 

5,972

 

181

 

13,200

 

(55

)

11

 

781

 

665

 

Other operating income

(2

)

(128

)

(3

)

(228

)

(44

)

(2

)

(149

)

(14

)

Results from operating activities

30

 

2,199

 

(80

)

(5,869

)

-

 

114

 

8,311

 

(74

)

Net finance income

(7

)

(493

)

(6

)

(419

)

18

 

(3

)

(237

)

108

 

Share of profit of equity accounted investees

(2

)

(151

)

(2

)

(176

)

(14

)

(1

)

(73

)

107

 

Profit / (loss) before Income Tax

39

 

2,843

 

(72

)

(5,274

)

-

 

118

 

8,621

 

(67

)

Income Tax

36

 

2,645

 

6

 

423

 

525

 

14

 

998

 

165

 

Profit / (loss) for the period

3

 

198

 

(78

)

(5,697

)

-

 

104

 

7,623

 

(97

)

 

Diluted Earnings Per Share (EPS)

0.02

 

1.19

 

(0.47

)

(34.37

)

-

 

0.63

 

45.83

 

(97

)

 

As % to revenues

Q3 FY21

Q3 FY20

Q2 FY21

Gross Profit

53.8

54.1

 

53.9

SG&A

29.2

28.9

 

26.8

R&D

8.3

9.0

 

8.9

EBITDA

24.0

24.5

 

25.9

PBT

5.8

(12.0

)

17.6

PAT

0.4

(13.0

)

15.6

EBITDA Computation

 

Particulars

Q3 FY21

Q3 FY20

Q2 FY21

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Profit before Income Tax

39

 

2,843

 

(72

)

(5,274

)

118

 

8,621

 

Interest income (net)*

(2

)

(180

)

(4

)

(274

)

(0

)

(1

)

Depreciation

29

 

2,131

 

29

 

2,130

 

30

 

2,188

 

Amortization

15

 

1,086

 

13

 

955

 

15

 

1,084

 

Impairment

82

 

5,972

 

181

 

13,200

 

11

 

781

 

EBITDA

162

 

11,851

 

147

 

10,737

 

174

 

12,673

 

 

* Includes income from Investments

All amounts in millions, except EPS. All US dollar amounts based on convenience translation rate of I USD = Rs. 73.01

Key Balance Sheet Items

 

 

 

Particulars

As on 31st Dec
2020

As on 30th Sep
2020

As on 31st Dec
2019

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Cash and cash equivalents and current investments

291

21,282

357

26,074

280

20,457

Trade receivables (current & non-current)

732

53,408

689

50,335

631

46,095

Inventories

607

44,309

563

41,134

517

37,746

Property, plant and equipment

771

56,263

754

55,026

722

52,709

Goodwill and Other Intangible assets

562

41,062

624

45,553

423

30,847

Loans and borrowings (current & non-current)

280

20,443

376

27,429

224

16,320

Trade payables

316

23,072

313

22,833

244

17,810

Equity

2,320

1,69,395

2,265

1,65,337

2,036

1,48,672

 

 

 

 

 

 

Revenue Mix by Segment

 

 

 

 

Segment

Q3 FY21

Q3 FY20

YoY
Gr %

Q2 FY21

QoQ
Gr %

(Rs.)

(Rs.)

(Rs.)

Global Generics

40,751

35,927

13

39,841

2

 

North America

17,394

15,999

9

18,328

(5

)

Europe

4,143

3,093

34

3,754

10

 

India

9,591

7,636

26

9,123

5

 

Emerging Markets

9,623

9,199

5

8,636

11

 

Pharmaceutical Services and Active Ingredients (PSAI)

7,009

6,906

1

8,505

(18

)

Proprietary Products & Others

1,536

1,005

53

621

147

 

Total

49,296

43,838

12

48,967

1

 

 

 

 

 

Revenue Analysis

Global Generics (GG)

Revenues from GG segment at Rs. 40.8 billion:

  • Year-on-year growth of 13% and sequential quarter growth of 2%, primarily driven by new product launches and integration of the acquired portfolio from Wockhardt in India. The volume growth in the base business was largely offset by price erosion.

North America

Revenues from North America at Rs. 17.4 billion:

  • Year-on-year growth of 9%, driven by new products launches, increase in volumes of our base business and a favorable forex rate, which was partially offset by price erosion.
  • Sequential decline of 5%, primarily due to price erosion in some of the key molecules.
  • We launched four new products during the quarter. This included Cinacalcet Tablets, Sapropterin Dihydrochloride Tablets and Succinylcholine Chloride Injection in the US along with Daptomycin Injection in Canada. We also re-launched one product in US - OTC Famotidine.
  • We filed two new ANDAs during the quarter. As of 31st December 2020, cumulatively 89 generic filings are pending for approval with the USFDA (87 ANDAs and 2 NDAs under 505(b)(2) route). Of the 89 ANDAs, 48 are Para IVs and we believe 24 have ‘First to File’ status.

Europe

Revenues from Europe at Rs. 4.1 billion:

  • Year-on-year growth of 34% and sequential growth of 10%, which were driven by new product launches, favorable forex movement and volume traction, offset partly by price erosion.

India

Revenues from India at Rs. 9.6 billion:

  • Year-on-year growth of 26% and sequential growth of 5%. YoY growth is on account of revenues from the acquired portfolio of Wockhardt and contribution from new product launches. QoQ growth was driven by volume traction.

Emerging Markets

Revenues from Emerging Markets at Rs. 9.6 billion. Year-on-year growth of 5%. Sequential growth of 11%:

  • Revenues from Russia at Rs. 4.5 billion. Year-on-year decline of 8% is primarily due to weakening Ruble. Sequential growth of 14% contributed by increased volumes
  • Revenues from other CIS countries and Romania market at Rs. 2.1 billion. Year-on-year growth of 18% and sequential growth of 8% driven by both base business and new product launches.
  • Revenues from Rest of World (RoW) territories at Rs. 3.0 billion. Year-on-year growth of 20% and sequential growth of 10% is due to volume traction in the base business and new product launches.

Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI at Rs. 7.0 billion:

  • Year-on-year growth of 1% driven by new products and favorable forex rate, offset by lower volumes for some products.
  • Sequential decline of 18% on account of lower volumes of certain products.
  • During the quarter we filed DMF for five products in the US.

Proprietary Products (PP) & Others

Revenues from PP & Others at Rs. 1.5 billion:

  • Year-on-year growth of 53% and sequential growth of 147%. The growth was driven by milestone income received for the compound AUR102.

Income Statement Highlights:

  • Gross profit margin at 53.8%:
    • Decline of 30 bps over previous year and 10 bps sequentially, which was primarily impacted due to price erosion and lower export benefits, partially offset by the milestone income received for the compound AUR102.
    • Gross profit margin for GG and PSAI business segments are at 57.6% and 25.3% respectively.
  • SG&A expenses at Rs. 14.4 billion, increased by 14% year-on-year primarily due to incremental costs post the integration of the acquired portfolio from Wockhardt in this year and increased freight expenses. Sequentially, it increased by 10% primarily due to pickup in sales & marketing activities in branded markets and increase in freight expenses.
  • Impairment charge of Rs. 6.0 billion. In January, 2021 there has been an additional generic launch for the product Nuvaring®, which has led to a considerable erosion in the value of this product for us, and accordingly we have taken an impairment charge of Rs. 3.2 billion. In addition to this, considering the current market dynamics, we have taken an additional impairment charge of Rs. 2.8 billion on the intangibles pertaining to other products. We had an impairment charge of Rs. 13.2 billion in Q3 FY 20 and Rs. 781 million in Q2 FY21.
  • R&D expenses at Rs. 4.1 billion. As % to revenues these are: Q3 FY21: 8.3% | Q2 FY 21: 8.9% | Q3 FY20: 9.0%. Our focus continues on building a healthy pipeline of new products across our markets including development of products pertaining to COVID-19 treatment.
  • Other operating income at Rs. 128 million compared to Rs. 228 million in Q3 FY20.
  • Net Finance income at Rs. 493 million compared to Rs. 419 million in Q3 FY20.
  • Profit before Tax at Rs. 2.8 billion, which is 5.8% of revenues.
  • Profit after Tax at Rs. 198 million. The effective tax rate is ~93.0% for the quarter, impacted primarily due to non-recognition of deferred tax asset on impairment.
  • Diluted earnings per share is at Rs. 1.19.

Other Highlights:

  • EBITDA at Rs. 11.9 billion and the EBITDA margin is 24.0%
  • Capital expenditure is at Rs. 2.9 billion.
  • Free cash-flow: Net out-flow during the quarter stood at Rs. 580 million.
  • Net cash surplus for the company is at Rs. 839 million as on December 31, 2020. Consequently, net debt to equity ratio is (0.005).

Earnings Call Details (05:30 pm IST, 07:00 am EST, Jan 29, 2021)

The management of the Company will host an earnings call to discuss the Company’s financial performance and answer any questions from the participants.

Conference Joining Information

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Play Back: The play back will be available after the earnings call, till February 5th, 2021. For play back dial in phone No: +91 22 7194 5757 | +91 22 6663 5757, and Playback Code is 37918.

Transcript: Transcript of the Earnings call will be available on the Company’s website: www.drreddys.com

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 gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, India, Russia & CIS countries, and Europe. 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 reorganization , including related integration issues, (vi) the susceptibility of our industry and the markets addressed by our, and our customers’, products and services to economic downturns as a result of natural disasters, epidemics, pandemics or other widespread illness, including coronavirus (or COVID-19), and (vii) other risks and uncertainties identified in our public filings with the Securities and Exchange Commission, including those listed under the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report on Form 20-F for the year ended March 31, 2020. The company assumes no obligation to update any information contained herein.

INVESTOR RELATIONS
AMIT AGARWAL
amita@drreddys.com
(Ph: +91-40-4900 2135)

MEDIA RELATIONS
APARNA TEKURI
aparnatekuri@drreddys.com
(Ph: +91-40-4900 2446)

Source: Dr. Reddy’s Laboratories Ltd.



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