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

Press Release

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DR. REDDY'S LABORATORIES LTD.		INVESTOR RELATIONS			MEDIA RELATIONS
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Dr. Reddy's Q3 & 9M FY21 Financial Results

Hyderabad, India, January 29, 2021: 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 Summary9M 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 gNuvaring. 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".

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All amounts in millions, except EPSAll 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				Q2 FY21		QoQ
			($)			(Rs.)			($)			(Rs.)			Gr %				($)				(Rs.)		Gr %
	Revenues	675		49,296			600		43,838		12			671		48,967	1
	Cost of Revenues	312		22,758			276		20,116		13			309		22,558	1
	Gross Profit			363		26,538			325		23,722		12				362			26,409		0
	Operating Expenses
	Selling, General & Administrative	197		14,387			174		12,670		14			180		13,107	10
	expenses
	Research and Development	56		4,108			54		3,949		4			60		4,359		(6)
	expenses
	Impairment of non-current assets	82		5,972			181		13,200		(55)			11		781		665
	Other operating income	(2)		(128)			(3)		(228)		(44)			(2)		(149)		(14)
	Results from operating activities			30		2,199			(80)		(5,869)		-				114			8,311			(74)
	Net finance income	(7)		(493)			(6)		(419)		18			(3)		(237)		108
	Share of profit of equity accounted	(2)		(151)			(2)		(176)		(14)			(1)		(73)		107
	investees
	Profit / (loss) before Income Tax			39		2,843			(72)		(5,274)		-				118			8,621			(67)
	Income Tax	36		2,645			6		423		525			14		998		165
	Profit / (loss) for the period			3		198			(78)		(5,697)		-				104			7,623			(97)
	Diluted Earnings Per Share (EPS)	0.02		1.19			(0.47)		(34.37)		-			0.63		45.83		(97)
		As % to revenues								Q3 FY21					Q3 FY20								Q2 FY21
		Gross Profit							53.8						54.1									53.9
		SG&A							29.2						28.9									26.8
		R&D							8.3						9.0									8.9
		EBITDA							24.0						24.5									25.9
		PBT							5.8						(12.0)									17.6
		PAT							0.4						(13.0)									15.6
												EBITDA Computation
		Particulars				Q3 FY21						Q3 FY20							Q2 FY21
					($)			(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

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

Key Balance Sheet Items

		As on 31st Dec		As on 30th Sep		As on 31st Dec
	Particulars		2020			2020			2019
		($)		(Rs.)		($)		(Rs.)		($)		(Rs.)
	Cash and cash equivalents and current	291		21,282		357		26,074		280		20,457
	investments
	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			Q2 FY21			QoQ
			(Rs.)			(Rs.)			Gr %			(Rs.)			Gr %
	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	7,009		6,906		1		8,505		(18)
	Ingredients (PSAI)
	Proprietary Products & Others	1,536		1,005		53		621		147
	Total			49,296			43,838			12			48,967			1

Q3 FY21 Sales Mix

North America

	14%	3%
	35%		Europe
			India
20%
			Emerging Markets
				PSAI

19%	8%
Proprietary Products &

Others

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Revenue Analysis

Global Generics (GG)

Revenues from GG segment at Rs. 40.8 billion:

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

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