dr. reddy’s laboratories limited investor...

LIFE . RESEARCH . HOPE

Dr. Reddy’s Laboratories Limited

Investor Presentation

June 2013

Safe Harbor Statement

This presentation contains forward-looking statements and information that involve risks, uncertainties and

assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies,

future events or performance and underlying assumptions and other statements that are other than statements

of historical fact, including, but not limited to, those that are identified by the use of words such as “anticipates,”

“believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects” and similar expressions. Risks and

uncertainties that could affect us include, without limitation:

General economic and business conditions in India;

The ability to successfully implement our strategy, our research and development efforts, growth and

expansion plans and technological changes;

Changes in the value of the Rupee and other currency changes;

Changes in the Indian and international interest rates;

Allocations of funds by the Government;

Changes in laws and regulations that apply to our customers, suppliers, and the pharmaceutical industry;

Increasing competition in and the conditions of our customers, suppliers and the pharmaceutical industry; and

Changes in political conditions in India.

Should one or more of such risks and uncertainties materialize, or should any underlying assumption prove

incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking

statements. Any forward-looking statement or information contained in this presentation speaks only as of the

date of the statement.

We are not required to update any such statement or information to either reflect events or circumstances that

occur after the date the statement or information is made or to account for unanticipated events. 1

Company Overview

Looking Back

Looking Forward

Business Updates

2

Our Strategy

Leverage industry-leading science & technology, product offering and

customer service with execution excellence.

Our Values

3

Integrity and Transparency

Productivity

Safety

Respect for Individual

Quality

Collaboration and Teamwork

Sustainability

Overview

4

Global Generics

Global access to affordable

medicines…

• FY13 Revenue mix 71% of total

• Finished dosage businesses in

distribution-driven as well as

doctor-driven markets

• Strategic „focus‟ on key large

markets North America,

India, Russia / CIS & other

Emerging Market territories and

Europe

Pharmaceutical

Services & Active

Ingredients

Deep Understanding …Partner

of Choice

• FY13 Revenue mix 26% of total

• Amongst the leaders in supply

of generic APIs globally

• Customers include generic

manufacturers, innovator

companies

Proprietary Products

Meeting unmet medical needs...

• Focus on building sustainable

and profitable branded

proprietary business

• Efforts in new drug discovery,

differentiated formulations &

Biologics (with a focus on

Generic Biopharmaceuticals)

* Revenue converted at the average billing rate for FY 13.

Integrated business model spanning 3 segments.

Minimizing Business risk Diversified Model

5

Global Generics

PSAI


Dr. Reddy’s

Generics : North America // Germany // Rest of Europe

Branded Generics : India // Russia & CIS // Other Emerging Markets // GSK Alliance

Generic Biopharmaceuticals

Active Ingredients

Custom Pharmaceutical Services

Specialty/Differentiated Formulations

Strong vertically integrated portfolio of businesses, geographies & products.

Company Overview

Looking Back

Looking Forward

Business Updates

6

The Last Decade

2004 2005

2006 2007

2008 2009

2010 2011

2012 2013

Acquired Roche's API business (Mexico)

Acquired betapharm simvastatin / finastride AG

Launched Reditux™ (Rituximab) World's 1st monoclonal antibody biosimilar in India

Acquired BASF’s formulation manufacturing unit and Dow Pharma’s small Molecules Business Launch of US specialty business, Promius TM Pharma.

Strategic alliance with GSK for emerging markets

Launched ‘Cresp®’( darbepoetin alfa) in India - world’s first generic and only one in India

$2 Bn in revenue

Acquired Octoplus Merck Serono deal for biosimilars

Acquired GSK’s Bristol penicillin facility 10th year of NYSE listing

Revenue CAGR – 19 % $ 2.23

Bn $ 463 Mn

Built the foundations for a strong business. Moved up the value chain. Strengthened capabilities. Achieved scale and global presence. Acquired to aid growth.

Revenue converted at respective years‟ average billing rate. 7

$1 Bn in revenue

Infrastructure : Global footprint

Numbers in brackets indicate number of facilities/plants

Princeton

Tennessee Louisiana

Mexico

Cambridge

India

Steroids

Oral solids and suspensions

Oral solids and topical

Chiral technology , mpegs

API (8) Finished Dosages (9) Biologics (1) Technology Development Centers (4)

R&D Centers

Leiden

Active ingredients , oral solids , injectables

Integrated Product Development Organization [IPDO] and NCE R&D center in Hyderabad, India Aurigene R&D center in Bangalore, India , Princeton

8

Our Strengths

1. Industry leading chemistry skills

Several niche product opportunities in API & generics (tacrolimus / lansoprazole / omeprazole mg OTC / fondaparinux / fexofenadine product family / Ibandronate / metoprolol succinate etc)

2. Early mover advantage in biosimilars

Global generic launch of rituximab

4 products in marketing portfolio

5. High vertical integration

Global leader in DMF filings (577– Mar’13)

4. Diversified business model

Risk diversified across different nature of businesses and across countries

3. Infrastructure

25+ billion units in generics capacities

9 formulation (4 USFDA

approved) and 8 API mfg facilities (All USFDA approved)

9

Robust improvement in financial metrics

FY09 FY10 FY11 FY12 FY13

1,353 1,428

1,639

1,918

2,232 Base Revenue ($ Mn)

PAT adjusted for one time non cash impairment charges & other non recurring

costs

All figures converted at respective

periods‟ average translation/

delivered rate

12%

13% 14%

16% 15%


PAT % to sales

16%

18% 18%

24% 23%


Base revenues represent revenues

excluding significant exclusivity sales


332 334

360

530

534

EBITDA ($ Mn)

10 RoCE mentioned above is pre-tax Operating RoCE adjusted for one time

non cash impairment charges & other non recurring costs

One-off contribution from exclusivity sales

All figures converted at respective periods‟ average translation/

delivered rate

Company Overview

Looking Back

Looking Forward

Business Updates

11

12

Corporate Governance, Sustainability and Operations excellence

Innovation (R&D)

Organic Growth

Productivity Inorganic Growth

Breadth and Depth

Customer relationships and engagement

Complex generics and injectables

Biosimilars

Differentiated Formulations

Procurement of product materials and packaging

Manufacturing processes

Product and market rationalisation

Marketing and distribution

Alliances – manufacturing & marketing

Capability based Acquisitions

In-licensing and brand acquisitions

Future Growth Drivers

• Growing pipeline of limited competition products in US

• E.g:

fondaparinux, tacrolimus, omeprazole Mg

OTC, metoprolol etc

Development catalysts

Current Performance

Improving R&D productivity & filings rate Greater share of

filings to belong

to niche

category

Technology Platforms to aid complex generic dev..

• Mpegs

• Chiral technology

• Biocatalysis

technology

• Polymer technology

Complex Generics

Future Outlook

Small molecules Complex generics

13

Company Overview

Looking Back

Looking Forward

Business Updates

14

Global Generics: North America


275 301

417

570 738 Base Revenues ($ Mn) Excluding upside revenues

Upside Revenues

$156 mn $54 mn $100 mn

Pipeline

Portfolio

Growing portfolio of limited competition

products

Mar-13 Mar-12

Tacrolimus 45% 22%

Lansoprazole 21% 19%

Ziprasidone 24% 27%

Fondaparinux 27% 24%

(Volume – Generics Market; Source: IMS Health

Inc Mar 2013)

65 pending ANDAs

(~$32 bn of innovator brand

sales value)

200 Cumulative

ANDAs

38 Para IVs

8 First-to-Files (FTFs)

15

Strategic

Focus

Service Level excellence

Steady growing business

High Quality portfolio

Global Generics: North America Continued growth in the period upto FY17

12-15 new launches annually

with launch-year

Mix of limited competition and

complex generics products to

significantly enhance

Continued strong engagement

with strategic customers

16

Emerging Markets Foot Print

Venezuela

New Zealand

South Africa

India

Srilanka

China

CIS

Russia

Jamaica Vietnam

Australia

Myanmar

Brazil

Emerging markets are projected to drive the global pharmaceutical market growth

17

Global Generics: Emerging Markets Russia

6th largest branded generic

Robust & consistent outperformance

of industry growth over the years


126 152

196

232

258 Revenue ($ Mn)

13%

18% 26%

29% 34%


Increasing mix of OTC sales

Top Products Market Share Rank

Omez 60% 1

Nise 63% 1

Ketorol 58% 1

Ciprolet 44% 1

Cetrine 33% 2

Senade 94% 1

Top 6 Rx products Top 2 in market shares

Source: Pharmexpert YTD Dec’2012 18

Focus & Build portfolio in select Therapeutic areas :

Focus Therapeutic areas Gastrointestinal Pain Anti-infectives Dermatology Cardiovascular Gynaecology

Existing Grow Mega brands

(brands > $20 mn) Scale-up OTC portfolio

New

Build portfolio of ‘differentiated’

& ‘difficult to manufacture’

products

Biosimilars & Oncology

19

Global Generics: Emerging Markets Russia

Global Generics: India


848 1,016

1,169 1,294

1,456

Revenue (Rs Crs)

Top 10 Brands Market Share Rank

Omez 54% 1

Nise 49% 1

Stamlo 19% 1

Omez-DSR 24% 2

Reditux NA ~1

Stamlo Beta 12% 2

Razo 14% 1

Atocor 5% 6

Razo-D 9% 1

Econorm 44% 1

Strong relationship with GP/CPs

Coverage of > 200,000 doctors

Overall prescription ranking at 11th

(Source: July-October„12 SMSRC data)

Strong market share in Top brands

Rs Crs


32 41

66

88 110

Growing portfolio of biosimilars

20

Focus & Build portfolio in select Therapeutic areas :

Focus Therapeutic areas Gastrointestinal Pain Anti-infectives Dermatology Cardiovascular Oncology

Existing Grow & sustain Mega brands

(brands > Rs. 30 crs)

Scale-up Biosimilars & Oncology

1 new biosimilar launch annually

New

Enhance customer

engagement through scale

up of Dr. Reddy’s Foundation

for Health Education

Global Generics: India

21

Global Generics : Europe


183 144

140

125 110

Revenue (€ Mn)

Europe

Strong cost control measures

Launch of new products outside the scope of

tenders

Selective approach of picking portfolio

22

All figures converted at respective years‟ average translation rate

Visibility of new launches, new customer lock-

ins and improving order book status

Pipeline

17 DMFs filed in Q4 FY13

Cumulatively 577 DMFs (US 184)

FY09 FY10 FY11 FY 12 FY 13

408 430 427

501 568 Revenue ($ Mn)

Pharmaceutical Services & Active Ingredients

23


Strategy

Calibrate investments and build a self-

sustainable, commercially valuable portfolio

of Specialty-oriented proprietary products

Pipeline

Other TAs Pain Dermatology

Approach

Pursue well-defined niche and semi-

blockbuster “Specialty” opportunities with

limited competition

Key Aspects

Shift from NCEs to focus on low risk R&D (differentiated products)

Focus on therapeutic areas of

a) Dermatology b) Pain c) Anti-infectives

Alliance with GSK to focus on

commercialization of differentiated products in Emerging Markets

24

Development catalysts

Current Performance

Filgrastim Rituximab Darbepoetin alfa Pegfilgrastim

1st biosimilar

monoclonal antibody in the world.

1st biosimilar filgrastim

(G-CSF) in India.

1st biosimilar

darbepoetin alfa in the world.

The only available in India.

A single source pegfilgrastim.

The only affordable pegfilgrastim in India.

2001 2007 2010 2011

Development, Manufacturing and Commercialization partnership with Merck Serono for entry into regulated markets

Biologics

25

Co-development Co-manufacturing Co-commercialization

• Global deal

• Portfolio of biosimilar compounds in oncology, primarily MAbs.

• Sharing of development costs.

•For non-covered products, Dr. Reddy’s continues to carry out the required development / manufacturing / commercialization.

-- Deal coverage --

Dr. Reddy’s – Merck Serono ‘Biosimilars’ deal

Revenue allocations

• Merck Serono Exclusive markets Royalty arrangement

• Dr. Reddy’s Exclusive & co-exclusive markets

• US market Co- commercialization

26

Thank You

For any information please contact Investor Relations Cell : Kedar Upadhye at [email protected] / +91 40 66834297 Saunak Savla at [email protected] / +91 40 49002135 Milan Kalawadia (USA) at [email protected] / +1 9082034931

mailto:[email protected]



Q4 FY13 Performance

28

• 6 ANDA filed

• 17 DMFs filed

• $43 mn

7.0% to sales

• $170 mn

28% to sales

37% YoY gr

• $ 613 Million

26% YoY gr

Revenue EBITDA

Filings R&D

All US dollar figures based on convenience translation rate of 1USD = Rs 54.52

Revenue mix by segment

Global Generics

North America

Europe

India

Russia & Other CIS

RoW

PSAI

North America

Europe

India

RoW

Proprietary Products & Others

Total

Q4 – Mar’13 Q4 – Mar’12 Growth%

414 337 23

209 160 31

34 33 2

64 59 9

83 65 27

24 20 18

187 137 36

38 22 73

81 51 58

30 24 23

39 40 (5)

12 13 (6)

613 488 26

$ mn

29

$ mn

All US dollar figures based on convenience translation rate of 1USD = Rs 54.52

FY 2013 Performance

30 # - Excluding the impact of Olanzapine from FY 12 All US dollar figures based on convenience translation rate of 1USD = Rs 54.52

• 18 ANDA, 1 NDA filed

• 47 DMFs filed

• $141 mn

6.6% to sales

30% YoY gr

• $510 mn

24% to sales

30%+ YoY gr#

• $ 2,133 Mn

26% YoY gr#

Revenue EBITDA

Filings R&D

Revenue mix by segment

Global Generics

North America

Europe

India

Russia & Other CIS

RoW

PSAI

North America

Europe

India

RoW

Proprietary Products & Others

Total

FY2013 FY2012 Growth%

1,514 1,206 26

694 502 38

142 151 (7)

267 237 13

310 243 28

101 72 42

563 437 29

105 78 34

220 155 43

85 66 29

152 138 10

55 49 12

2,133 1,692 26

$ mn

All US dollar figures based on convenience translation rate of 1USD = Rs 54.52 # - Excluding the impact of Olanzapine from FY12 31

$ mn

Key Balance Sheet Items

Cash & Cash Equivalents

Net Operating Working Capital

Property, plant & equipment

Goodwill & Intangibles

Loans & borrowings (current & non current)

Equity & Reserves

March 2013 Dec 2012

405 427

765 716

694 663

257 228

673 675

1,341 1,225

$ mn

o Capital expenditure during Q4 FY 13 $26 mn

o Current Cash flow hedge options of ~ $480 mn [range of Rs 56 to Rs 59]

All US dollar figures based on convenience translation rate of 1USD = Rs 54.52 32

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