Dr. Reddy’s Q3 & 9M FY21 Financial Results
01/29/2021 - 04:37 AM
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.
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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.
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