Dr Reddy Laboratories : Outcome of Board Meeting – January 29, 2021

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Dr.Reddy's �;•

January 29, 2021

The Secretary/ Executive Director

BSE Limited

National Stock Exchange ofIndia Limited

New York Stock Exchange, Inc.

NSE-IFSC Limited

Dear Sir/Madam,

Dr. Rcddy'3 Loboretories Ltd.

8-2-337, Road No. 3, Banjara Hills,

Hyderabad - 500 034, Telangana,

India.

CIN: L85195TG1984PLC004507

Tel	:+91	40 4900 2900
Fax	:+91	40 4900 2999

Email :[e-mail] www.drreddys.com

Sub:Outcome ofBoard Meeting - Unaudited Financial Results for the quarter and nine months ended December 31, 2020.

Further to our letter dated December 28, 2020, we would like to inform you that the Board of

Directors of the Company at their meeting held on January 29, 2021 have approved the Unaudited Financial Results of the Company for the quarter and nine months ended December 31, 2020.

In terms ofthe above, we are enclosing herewith the following:

1. Unaudited Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2020 prepared in compliance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB).
2. Press Release on Financial Results ofthe Company for the above period.
3. Unaudited Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2020 as per Indian Accounting Standards.

4. Unaudited Standalone Financial Results of the Company for the quarter and nine months ended December 31, 2020 as per Indian Accounting Standards.

Pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Limited Review Reports of the Statutory Auditors on the Unaudited Standalone and Consolidated Financial Results at point nos. 3 and 4 are also enclosed.

The Board meeting commenced at 09.05 AM and concluded at 11.15 AM.

This is for your information and records.

With regards,

Encl.: as above

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Dr.Reddy's �;•

Dr. Raddy's Laboratories Ltd.

8-2-337, Road No. 3, Banjara Hills,

Hyderabad· 500 034, Tehmgana,

India.

CIN: L85195TG1984PLC004507

Tel	:+91	40 4900 2900
Fax	:+91	40 4900 2999

Email:[e-mail] www.drreddys.com

Unaudited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter and nine months ended 31 December 2020 prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)

SI. No.

Particulars

• Revenues

• Cost of revenues

• Gross profit (1 - 2)

• Selling, gene,al and administrative expenses
  5 Research and development expenses
  6 lmpainnent ofnon current assets
  7 Other income, net
  Total operating expenses
  8 Results from operating activities 1(3) - (4 + 5 + 6 + 7)] Finance income
  Finance expense
  9 Finance income, net

10	Share ofprofit ofequity accounted investees, net oftax
11	Profit before tax (8 + 9 + 10)
12	Tax expense/(benefit), net
13	Profit for the period/ year (11 -12)
14	Earnings per share:
	Basic earnings per share ofRs.5/- each

31.12.2020

(Unaudited)

49,296

22,758

26,538

14,387

4,108

5,972

(128)

24,339

2,199

681

(188)

493

151

2,843

2,645

198

1.19

Quarter ended

30.09.2020

(Unaudited)

48,967

22,558

26,409

13,107

4,359

781

(149)

18,098

8,311

489

(252)

237

73

8,621

998

7,623

45.96

31.12.2019

(Unaudited)

43,838

20,116

23,722

12,670

3,949

13,200

(228)

29,591

(5,869)

571

(152)

419

176

(5,274)

423

(5,697)

(34.37)

All amounts .m Ind'1an llupces m, ions

Nine months ended	Year ended
31.12.2020		31.12.2019	31.03.2020
(Unaudited)	(Unaudited)	(Audited)
142,438		130,282	174,600
64,736		59,081	80,591
77,702		71,201	94,009
40,280		37,952	50,129
12,447		11,220	15,410
6,753		16,760	16,767
(395)	(4,122)	(4,290)
59,085		61,810	78,016
18,617		9,391	15,993
2,008		1,796	2,461
(673)	(753)	(983)
1,335		1,043	1,478
301		456	561
20,253		10,890	18,032
6,639		(966)	(1,466)
13,614		11,856	19,498
82.08		71.53	117.63

Diluted earnings per share ofRs.5/- each

1.19

(Not annualised)

45.83 (34.37)

(Not annualised) (Not annualised)

81.85	71.40	117.40
(Not annualised)	(Not an1111alised)

•·· Dr.Reddy's ��•

Sc!(mcnt reporting (consolidated)

			Quarter ended
SI. No.	Particulars	31.12.2020	30.09.2020	31.12.2019
		(Unaudited)	(Unaudited)	(Unaudited)
	Segment wise revenue and results:
I	Segment revenue:
	a) Pharmaceutical Services and Active Ingredients	8,745	10,256	8,549
	b) Global Generics	40,751	39,841	35,927
	c) Proprietary Products	124	100	241
	d) Others	1,412	521	764
	Total	51,032	50,718	45,481
	Less: Inter-segment revenues	1,736	1,751	1,643
	Net revenues	49,296	48,967	43,838
2	Segment results:
	Gross profit from each segment
	a) Pharmaceutical Services and Active Ingredients	1,773	2,284	2,072
	b) Global Generics	23,454	23,685	20,910
	c) Proprietary Products	100	88	246
	d) Others	1,211	352
	Total	26,538	26,409	23,722
	Less: Selling and other un-allocable expenditure, net ofother	23,695	17,788	28,996
	Total profit before tax	2,843	8,621	(5,274)

All amounts in Indian Rup�cs millions

Nine months ended	Year ended
31.12.2020	31.12.2019	31.03.2020
(Unaudited)	(Unaudited)	(A111Jilcd)
29,091
22,984	31,657
115,667	101,725	138,123
280	7,947	7,949
2,424	2,058	2,781
147,462	134,714	180,510
5,024	4,432	5,910
142,438	130,282	174,600
6,913	4,147	6,190
68,665	58,117	78,449
244	7,751	7,744
1,880	1,186	1,626
77,702	71,201	94,009
57,449	60,311	75,977
20,253	10,890	18,032

Global Generics segment includes operations of Biologics business. Inter-segment revenues represent sale from Phannaceutical Ser.iices and Active Ingredients to Global Generics at cost.

Notes:

The unaudited results have been reviewed by the Audit Committee ofthe Board on 28 January 2021 and approved by the Board ofDirectors of the Company at their meeting held on 29 January 2021. The above financial results have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS), as issued by the International Accounting Standards Board (IASB).

2 During the quarter ended 31 Decembe,- 2020, there were significant changes to the market conditions for certain ofthe products fanning part of Company's Global Generics and Proprietary Products segments The changes include the launch by competitor of generic version of the product, decrease in the market potential of products primarily due to higher than expected price erosion and increased competition, and higher than expected value erosion. Due to these adverse market developments, the Company recorded an impairment loss of:

• Rs. 3,180 million relating to Ethinyl estradiol / Ethenogestral vaginal ring (a generic equivalent to NuvaRing®);
• Rs 1,587 million relating to Saxagliptin and metfonnin (generic version ofKombiglyze-XR) and Phentermine and Topiramate (generic version ofQsymia®); and
• Rs. 1,159 million relating lo other intangible assets fanning part of the Company's Global Generics and Proprietary Products segments.

In addition, an amount ofRs. 46 million was recorded as impairment loss pertaining to property, plant and equipment on write-down of assets to fair value less costs to sell fanning part of Company's Global generics segment.

• During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Phannaceuticals Ltd. to acquire, certain brands in various Emerging Market countries for a total consideration of Rs. 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles

• Impainnent expense ofRs. 781 million for the quarter ended 30 September 2020 comprises of:
• • Rs, 728 million pertaining to product related intangible fanning part ofCompany's Proprietary Segment due to decrease in the market potential for the product;
  • Rs. 53 million pertaining to certain product related intangibles fom1ing part of Company's Global generics Segment due to Company's decision to discontinue their fu11her development.

• Tax expense for the quarter ended 30 September 2020 includes benefit on account of recognition of deferred tax asset amounting to Rs. 1,012 million pursuant to a planned restructuring activity between the Group companies. The said restructuring activity was concluded during the quarter ended 31 December 2020.

• On 10 June 2020, the Company completed the acquisition ofselect divisions ofWockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dennatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the Company completed the purchase price allocation. The fair value of consideration transferred is Rs.16,115 million. The Company recognised Rs. 373 million, Rs. 14,888 million and Rs. 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company's Global Generics segment.

• "Revenues" for the year ended 31 March 2020 include an amount of Rs. 7,486 million (U.S.$108.7 million) towards license fee for selling US and select territory rights for ZEMBRACE"' SYMTOUCH"' (sumatriptan injection) 3 mg and TOSYMRA"' (sumatriptan nasal spray) 10 mg, (fonnerly referred to as "DFN-02") to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

• "Other income, net" for the year ended 31 March 2020 includes an amount of Rs. 3,457 million received from Celgene, pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company's ANDS for a generic version ofREVLIMID brand capsules, (Lenalidomide) pending before Health Canada,

9 Total impairment charge for the year ended 31 March 2020 is Rs. 16,767 million, of which Rs. 11,137 million was towards impainnent ofgNuvaring, Rs. 4,385 miIlion was cin and imiquimod, and the balance is towards other product related intangibles fanning part of Company's Global generics and Proprietary Products

10led 31 March 2020 was primarily due to recognition of deferred tax asset of:

MAT recoverable pursuant to enactment of Taxation Laws (Amendment) Act, 2019; to a planned restructuring activity between the g1oup Companies

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Dr.Reddy's �;•

11 The Code 011 Social Security, 2020 ('Code') received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which the Code will come into effect has not been notified The Company will assess the impact of the Code and the rules thercunde, when they come into effect.

1. On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The Company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based 011 our forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future.
2. The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments. For this purpose, the Company considered internal and external sources of infonnation up to the date of approval of these financial results. The Company based on its judgements, estimates and assumptions including sensitivity analysis expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets.The Company will continue to closely monitor any material changes to future economic conditions.
3. The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 28 January 2021 and approved by the Board of Directors of the Company at their meeting held on 29 January 2021.
4. The results for the quarter and nine months ended 31 December 2020 were subjected to a "Limited Review". An unqualified report was issued thereon.

By order of the Board

For Dr. Reddy's Laboratories Limited

Place: Hyderabad		G V Prasad
Date: 29 January	2021	Co-Chainnan & Managing Director