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Jul 31, 2015

Dr. Reddy’s Q1 FY16 Financial Results

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Dr. Reddy’s Q1 FY16 Financial Results
Hyderabad, India, July 30, 2015: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY | BSE: 500124 | NSE: DRREDDY)
today announced its consolidated financial results for the quarter ended June 30, 2015 under International Financial
Reporting Standards (IFRS).
Q1 FY16: Key Highlights
o Consolidated revenues at ₹37.6 billion, year-on-year growth of 7%
o Gross Profit Margin at 61.1%, improved by 180 bps over last year
o Research & Development (R&D) spend at ₹4.4 billion. Continued focus on building complex and
differentiated pipeline.
o Selling, general & administrative (SG&A) expenses at ₹11.0 billion. Marginal year-on-year increase.
o EBITDA for Q1 FY 16 at ₹9.9 billion, 26% of revenues, year-on-year growth of 12%.
o Profit after tax for Q1 FY 16 at ₹6.3 billion, 17% of revenues, year-on-year growth of 14%
Commenting on the results, Dr. Reddy’s co-chairman and CEO, GV Prasad said, "Our first quarter
results, with YoY growth of 7% in topline and 14% in bottom line, reflects healthy performance. We
were able to achieve these results despite limited new launches and headwinds in the form of currency
devaluation in key emerging markets. As we continue to further strengthen our product portfolio and
drive new launches, we are well positioned for the next phase of our growth.”

Segmental Analysis
Global Generics
Revenues from Global Generics segment for Q1 FY16 are at $31.0 billion, year-on-year growth of
8%, primarily driven by North America, Europe, Venezuela and India.
 Revenues from North America for Q1 FY16 at $18.5 billion, year-on-year growth of 14%.
Primarily on account of:
- Sustained performance of the injectable franchise and market share gains in key molecules
- Contribution from products launched subsequent to quarter ended June 30, 2014 majorly
being valganciclovir, sirolimus, Habitrol® etc.
- 6 new product filings in the US during the quarter. Cumulatively, 73 ANDAs are pending
for approval with the USFDA of which 47 are Para IVs out of which we believe 16 to have
‘First to File’ status.
 Revenues from Emerging Markets for Q1 FY16 at $5.8 billion, year-on-year decline of 20%.
- Revenues from Russia at $2.3 billion, year-on-year decline of 45% primarily on account
of the ongoing macro-economic uncertainties and the consequent depreciation of rouble.
In constant currency revenues declined by 22%.
- Revenues from CISR markets at $0.8 billion, and remained flat on a year-on-year basis.
Growth was affected primarily on account of currency depreciation.
- Revenues from Rest of World (RoW) territories at $2.7 billion recorded year-on-year
growth of 21%. Of this Venezuela delivered strong growth of 42% on the back of
continuing volumes uptake.
 Revenues from India for Q1 FY16 at $4.8 billion, year-on-year growth of 19%.
- Growth is driven by continued focus on new product launches and prescription growth.
- As per IMS Jun’15, Dr Reddy’s MAT Gr% at 16.8% versus market Gr% of 13.9%.
Integration of the UCB products portfolio completed during the quarter
 Revenues from Europe for Q1 FY16 at $1.9 billion, year-on-year growth of 43%. Growth was
primarily driven by new products (aripiprazole and pregabalin) launched during the fourth
quarter of fiscal 2015.
Pharmaceutical Services and Active Ingredients (PSAI)
 Revenues from PSAI for FY15 at $5.6 billion, and remained flat on a year-on-year basis.
 During the quarter, 9 DMFs were filed globally. The cumulative number of DMF filings as of
June 30, 2015 is 747.
Income Statement Highlights:
 Gross profit margin at 61.1% and registered an improvement of ~180 bps over that of previous
year. Gross profit margin for Global Generics (GG) and PSAI business segments are at 67.6%
and 23.7% respectively.
 Selling, General and Administration (SG&A) expenses at $11.0 billion, year-on-year increase
of 3%. SG&A as % to sales improved by ~120 bps over previous year.
 Research & development expenses at $4.4 billion, year-on-year increase of 13%. 11.7% of
revenues in Q1 FY16 as compared to 11.0% of revenues in Q1 FY15. The increase is in line
with our planned scale-up in development activities.
 Net Finance income at $216 million compared to $481 million in Q1 FY15. The net decrease
in Finance income is on account of:
- Net forex gain of $12 million in the current quarter vs $476 million in the previous year
- Certain monetary assets and liabilities of the Venezuelan subsidiary that may not qualify
for translation at the CENCOEX rate of VEF 6.3 per USD, have been translated at the
SIMADI rate of VEF 197 per USD and the resultant charge of $100 million has been
recorded as foreign exchange loss.
- Incremental profit on sales of investments of $179 million.
- Net increase in interest income of $120 million.
 Profit after Tax at $6.3 billion, 17% of revenues, year-on-year growth of 14%.
 Diluted earnings per share is at $36.6
 Capital expenditure is at $2.6 billion.

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