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ABOUT COMPANY
Incorporated in 1984, Dr. Reddys Laboratories (Dr. Reddysor the Company) is a global pharmaceutical company withfootprints over 25 countries. The Companys purpose is toprovide affordable and innovative medicines for healthier
lives, which we do through: Pharmaceutical Services and Active Ingredients (PSAI),comprising Active Pharmaceutical Ingredients (API) andCustom Pharmaceuticals Services (CPS).
Global Generics (GG) businesses, which includes brandedand unbranded prescription and over-the-counter (OTC)pharmaceutical products. Proprietary Products (PP), comprising of biosimilars,differentiated formulations and New Chemical Entities (NCEs
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KEY STRENGTHS OF THIS COMPANY
The Company enjoys some key strengths which arelisted below:
Industry leading chemistry skills and developmentprocesses which have resulted in monetizing several
niche product opportunities. A high degree of vertical integration with most of the
APIs being sourced internally to manufactureformulations. This has not only helped in speed to
market but also kept Dr. Reddys generic andformulation products cost competitive. The Companyranks amongst the global leaders in Drug MasterFilings (DMF), with 486 global DMFs as of 31 March2011.
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The Company enjoys critical business mass in key
markets such as North America, Russia and India.
Creates and leverages value opportunities
through strategic partnerships.
Has established a presence in biosimilars through
Reditux, Dr. Reddys brand of rituximab, the
worlds first biosimilar monoclonal antibody,as well as three additional products, Grafeel,
Cresp and Peg-Grafeel.
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KEY FINANCIAL HIGHLIGHTS
As per financial reporting standards prescribed
under the International Financial Reporting Standards
(IFRS):
The Companys consolidated revenue for
2010-11 grew by 6% to ` 74,693 millions
(US$ 1.7 billion). Dr. Reddys revenue has been rising
at a CAGR of 21% over the last ten years.
Profit after tax (PAT) for 2010-11 was ` 11,040
millions versus ` 1,068 millions in 2009-10.
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KEY EVENTS
In 2010-11, Dr. Reddys acquired GlaxoSmithKlines(GSK) oral penicillin manufacturing facility located in
Tennessee, USA.
This allows the Company to enter the US penicillin-containing antibacterial market segment through
brands such as Augmentinand Amoxil, and serve
the needs of customers through manufacturing and
other capabilities that did not previously exist
within Dr. Reddys.
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Company increased the stake in this JV to 100%after acquiring the 40% stake of the partner. South
Africa is an important market and the Company
hopes to increase the presence there, especially in
the areas of the Central Nervous System (CNS),
oncology and womens health
2010-11 saw an expansion of Over-the-counter
(OTC) and prescription portfolio in Russia and theCommonwealth of Independent States (CIS)
through various in-licensing deals with partners
for exclusive marketing rights.
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BIOSIMILARSTHE NEXT WAVE OF
GROWTH
Dr. Reddys has sold approximately 1.4 million units ofbiosimilar products and has treated approximately
97,000 patients in 12 countries
Launched three years ago, Reditux In 2010 11,registered a growth of 75% over the previous year and
is now among the Companys Top Five brands in India.
In March 2011, the Company launched Peg-grafeelTM
in India in the form of an affordable pegfilgrastim,
which is used to stimulate the bone marrow to produce
more neutrophils to fight infection in patients
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FOCUS ON R&D
Investments in R&D in 2010-11 grew by 33% to5,060 millions. This represents 7% of overall
sales, compared to 5% in 2009-10.
Dr. Reddys has filed 21 ANDAs in 2010-11. As of 31March 2011, the Company has 179 cumulativeANDAs (including partnered ANDAs).
The Company has filed 56 DMFs in 2010-11 whichincludes 19 DMFs in the US, 7 in Europe, and 30 inthe rest of the world. As of 31 March 2011, Dr.Reddys has filed 486 cumulative DMFs, and is
among the global leaders in DMF filings.
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KEY GLOBAL TRENDS
Increasing pace of genericization Key growth drivers and resistors facing healthcare
payers and pharma
Global market for biosimilars is expected to
be more than 15 times the current size in the
next five years.
Rapid erosion from Cns and Cardiovascular
therapeutic areas metabolic, oncology, and drugs for the
treatment of immunology and inflammatory disorderswill experience strong sales growth
significant new breakthroughs on the horizon.
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ANALYSIS
A Selling General and Administrative Expenses:
Selling, General and Administrative (SG&A)expenses increased by 5% to ` 23,689 millions
in 2010-11.
R&D Expenses
R&D expenses grew by 33% to ` 5,060 millions. As
a share of total revenue, R&D expenditure was at
7% in 2010-11, compared to 5% in 2009-10.
Net Income
Dr. Reddys net profit was ` 11,040 millions in 2010-
11, versus a net profit of ` 1,068 millions in 2009-10.
Income Tax
Provision for income tax for 2010-11 amounted to ` 1,403millions compared to ` 985 millions in 2009-10.
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Other Expense / (Income), net
In 2010-11, net other income amounted to 1,115
millions compared to ` 569 millions in 2009-10.
This was primarily on account of profit from sale ofland. During the year the Company also recorded
an amount of ` 73 millions towards negative goodwill under Other
Income.
Finance Expenses / (Income), net
Finance costs (net) are at ` 189 millions in 2010-11 versus ` 3 millions in2009-10 The change is mainly
on account of: (i) net foreign exchange (forex) loss of ` 57 millions in
2010-11 (ii) net interest expense of ` 199 millions in 2010-11 versus `
123 millions in 2009-10 largely due to an increase in the outstandingamount of short term loans profit on sale of investments of ` 68
millions in 2010-11 versus ` 48 millions in 2009-10.
Debt-Equity
The Companys ratio of total debt-to-stockholders equity increased to
0.51 as on 31 March 2011 from 0.34 on 31 March 2010.
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CAUTIONARY STATEMENT
The management of Dr. Reddys has preparedand isresponsible for the financial statements that appear inthis report. These financial statements are inconformity with International Financial Reporting
Standards, as issued by the International AccountingStandards Board and accounting principles generallyaccepted in India and therefore include amounts
based on informed judgments and estimates. Themanagement also accepts responsibility for thepreparation of other financial
information that is included in this report