Dr. Reddy’s Laboratories has announced its consolidated financial results for the third quarter and nine months ended December 31, 2016 under International Financial Reporting Standards (IFRS).
Q3 FY17: Key Highlights
Revenues at Rs. 37.1 billion: QoQ growth: 3%
YoY decline: 7%
Gross Profit Margin at 59.1%.
Research & Development (R&D) spend at Rs. 5.0 billion. [13.4% of Revenues]
Selling, general & administrative (SG&A) expenses at Rs. 11.3 billion [YoY decline: 6%]
EBITDA at Rs. 8.8 billion [23.7% of Revenues]
Profit after tax at Rs. 4.7 billion [12.7% of Revenues]
9M FY17: Key Highlights
Revenues at Rs. 105.3 billion: YoY decline: 10%
Gross Profit Margin at 57.2%.
Research & Development (R&D) spend at Rs. 15.0 billion. [14.2% of Revenues]
Selling, general & administrative (SG&A) expenses at Rs. 35.4 billion [YoY increase: 4%]
EBITDA at Rs. 19.2 billion [18.2% of Revenues]
Profit after tax at Rs. 8.9 billion [8.5% of Revenues]
Commenting on the results, Co-chairman and CEO, G V Prasad said "Our performance in Q3 has delivered a modest sequential revenue growth of 3% over the previous quarter. Our EBITDA has improved significantly from the last quarter to Rs. 8.8 billion, on the back of enhanced emphasis on operational efficiencies and controlling of SG&A costs across all our businesses."
All amounts in millions, except EPS
All US dollar amounts based on convenience translation rate of I USD = Rs. 67.92
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
Particulars
Q3 FY17
Q3 FY16
Growth %
($)
(Rs.)
%
($)
(Rs.)
%
Revenue
546
37,065
100.0
584
39,679
100.0
(7)
Cost of revenues
223
15,166
40.9
237
16,089
40.5
(6)
Gross profit
322
21,899
59.1
347
23,590
59.5
(7)
Operating Expenses
Selling, general & administrative expenses
167
11,341
30.6
177
12,039
30.3
(6)
Research and development expenses
73
4,956
13.4
60
4,095
10.3
21
Other operating income
(3)
(187)
(0.5)
(2)
(122)
(0.3)
53
Results from operating activities
85
5,789
15.6
112
7,578
19.1
(24)
Net finance (income) / expense
(1)
(44)
(0.1)
1
62
0.2
171
Share of profit of equity accounted investees
(1)
(89)
(0.2)
(1)
(64)
(0.2)
38
Profit before income tax
87
5,922
16.0
112
7,580
19.1
(22)
Income tax expense
18
1,221
3.3
26
1,788
4.5
(32)
Profit for the period
69
4,701
12.7
85
5,792
14.6
(19)
-
-
Diluted EPS
0.42
28.32
0.50
33.86
(16)
EBITDA Computation
Particulars
Q3 FY 17
Q3 FY 16
$
Rs.
$
Rs.
Profit before income tax
87
5,922
112
7,580
Interest income, net*
(1)
(53)
(3)
(236)
Depreciation
29
1,936
25
1,685
Amortization / Impairment
15
988
16
1086
EBITDA
129
8,793
149
10,115
EBITDA% to Revenues
23.7%
25.5%
* Includes income from Investments
Key Balance Sheet Items
Particulars
As on 31st Dec 16
As on 30th Sep 16
($)
(Rs.)
($)
(Rs.)
Cash and cash equivalents and Other current Investments
297
20,145
315
21,379
Trade Receivables
605
41,119
544
36,939
Inventories
442
30,052
420
28,516
Property, plant and equipment
842
57,209
825
56,052
Goodwill and Other Intangible assets
736
49,977
747
50,766
Loans and borrowings (current & non-current)
854
57,999
890
60,480
Trade & other payables
196
13,308
181
12,281
Equity
1,782
121,040
1,697
115,264
All amounts in millions, except EPS
All US dollar amounts based on convenience translation rate of I USD = Rs. 67.92
Revenue Mix by Segment [Year on year]
Particulars
Q3 FY17
Q3 FY16
Growth %
($)
(Rs.)
%
($)
(Rs.)
%
Global Generics
451
30,638
83
494
33,558
84
-9
North America
16,595
19,417
-15
Europe*
2,148
1,937
11
India
5,947
5,805
2
Emerging Markets#
5,948
6,399
-7
PSAI
80
5,400
14
75
5,082
13
6
North America
1,259
1,037
21
Europe
1,828
1,951
-6
India
409
622
-34
Rest of World
1,904
1,472
29
Proprietary Products & Others
15
1,027
3
15
1,039
3
-1
Total
546
37,065
100
584
39,679
100
-7
Revenue Mix by Segment [Sequential]
Particulars
Q3 FY 17
Q2 FY 17
Growth %
($)
(Rs.)
%
($)
(Rs.)
%
Global Generics
451
30,638
83
427
28,995
81
6
North America
16,595
16,134
3
Europe*
2,148
1,776
21
India
5,947
6,251
-5
Emerging Markets#
5,948
4,834
23
PSAI
80
5,400
14
85
5,784
16
-7
North America
1,259
1,135
11
Europe
1,828
2,095
-13
India
409
575
-29
Rest of World
1,904
1,979
-4
Proprietary Products & Others
15
1,027
3
16
1,078
3
-5
Total
546
37,065
100
528
35,857
100
3
* Europe primarily includes Germany, UK and out licensing sales business
# Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets including Venezuela
Segmental Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 30.6 billion, year-on-year decline of 9%; primarily on account of lower contribution from North America and Venezuela. However, it grew by 6% sequentially.
Revenues from North America at Rs. 16.6 billion. Year-on-year decline of 15%, primarily on account of increased competition in valgancyclovir and our injectables franchise coupled with continuing pricing pressure.
During the quarter we launched 5 new products i.e. Aripiprazole, Lamotrigene ODT, Fluoxetine Tabs, Raloxifene HCl and Nystatin - Triamcinolone Cream.
As of 31st December 2016, cumulatively 92 generic filings are pending for approval with the USFDA (90 ANDAs and 2 NDAs under 505(b)(2) route). Of these 90 ANDAs, 59 are Para IVs out of which we believe 20 have ‘First to File’ status. Further, these 90 ANDAs include 7 ANDAs, acquired from Teva, of which 6 are Para IVs.
Revenues from Emerging Markets at Rs. 5.9 billion, year-on-year decline of 7%. [Ex-Venezuela: growth of 7%]
Revenues from Russia at Rs. 3.1 billion, year-on-year decline of 2%. In constant currency it declined by 5%.
Revenues from other CIS countries and Romania market at Rs. 1.0 billion, year-on-year growth of 16%.
Revenues from Rest of World (RoW) territories at Rs. 1.8 billion, year-on-year decline of 23% primarily on account of sales decline in Venezuela.
Revenues from India at Rs. 5.9 billion, year-on-year growth: 2.4%.
Revenues from Europe at Rs. 2.1 billion, year-on-year growth: 11%.
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 5.4 billion, year-on-year growth of 6%. On a sequential basis revenues declined by 7%.
During the quarter, 16 DMFs were filed globally of which 1 was in the US. The cumulative number of DMF filings as of 31stDecember, 2016 was 782.
Proprietary Products (PP)
Zembrace™Sym Touch ™(Suma 3 mg) injection and Sernivo™ (betamethasone dipropionate) Spray, 0.05% are gradually gaining traction in prescriptions.
Income Statement Highlights:
Gross profit margin at 59.1% and declined by ~40 bps over that of previous year, primarily on account of price erosion in the US. This has been caused due to new competitor’s entry in some of key molecules. Gross profit margin for GG and PSAI business segments are at 64.1% and 28.3% respectively.
SG&A expenses at Rs. 11.3 billion, year-on-year decline by 6%. After normalization of the Venezuela base effect and the settlement charge paid to Novartis wrt zoledronic acid in previous year, there is a marginal increase which is largely attributable to normal salary increments, headcount and other costs.
Sequentially, there is a decline of 4%. Normalized for the NPPA charge that we took last quarter, there is no major variance.
Research & development expenses at Rs. 5.0 billion. As a % to Revenues- Q3 FY 17:13.4% | Q2 FY 17: 14.5% | Q1 FY 17: 14.8%]. Current quarter also includes spend towards the IPR&D assets in-licensed from Xenoport and Eisai. Focus continues on building complex generics, biosimilars and differentiated products pipeline.
Net Finance income at Rs. 44 million compared to the net finance expense of Rs. 62 million in Q3FY16. The incremental benefit of Rs. 106 million is on account of:
Net foreign exchange loss of Rs. 10 million in the current quarter vs net foreign exchange loss of Rs. 297 million in the previous year
Increase in profit on sales of investments by Rs. 36 million.
Net increase in interest expense of Rs. 218 million.
Profit after Tax at Rs. 4.7 billion
Diluted earnings per share is at Rs. 28.32
Capital expenditure is at Rs. 3.0 billion.
ALL
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