001 investor presentation june2012

7/31/2019 001 Investor Presentation June2012

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Dr. Reddys Investor Presentation

June 2012


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Safe Harbor Statement

This presentation contains forward-looking statements and information that involve risks, uncertainties andassumptions. 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 statementsof 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 anduncertainties 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 andexpansion 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 proveincorrect, actual outcomes may vary materially from those indicated in the applicable forward-lookingstatements. Any forward-looking statement or information contained in this presentation speaks only as of thedate 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


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Company Overview

Looking Back / Looking Forward

Business Updates

2


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380463 447

546

1,510

1,2501,365

1,5631,677

1,901

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Germany & Mexicoacquisitions

Authorized genericlaunches

5

Revenues [USD Mn]

All figures converted at respective years USD to INR convenience translation rate.

Built the foundations for a strong business. Moved up the value chain. Strengthened capabilities.

Achieved scale and global presence. Acquired to aid growth.

The Last Decade


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Minimizing Business r isk Diversif ied ModelDiversity in product service offering & geographic mix

6

GlobalGenerics

PSAI

ProprietaryProducts

Others

Dr.Reddys

Generics:NorthAmerica//Germany//RestofEurope

BrandedGenerics:India//Russia&CIS//Other

EmergingMarkets//GSKAlliance

ActiveIngredients

CustomPharmaceuticalServices

Specialty/DifferentiatedFormulations

Biologics

Aurigene


8/27

Our Strengths

Industryleading

chemistry

skills

SeveralnicheproductopportunitiesinAPI&generics(tacrolimus/lansoprazole/omeprazoleOTC/fondaparinux/fexofenadine

productfamily,etc)

Highvertical

integration

GloballeaderinDMFfilings(543 Mar12)

Earlymoveradvantageinbiosimilars

Onlyglobalgenericlaunchofrituximab

4products

in

marketing

portfolio

Infrastructure

20+billionunitsingenericscapacities

9formulation

mfg

facilities

(4USFDA

approved)

8APImfgfacilities(7USFDAapproved)

Diversified

business

model Riskdiversifiedacrossdifferentnature of

businessesandacrosscountries


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8

Infrastructure

Investing for future : 20+ bn finished dosage units

Current Infrastructure

API Manufacturing : India 6, UK 1, [All 7, USFDA approved], Mexico 1

Finished Dosages : India 7 [2 USFDA approved]

Manufacturing US 2 [USFDA approved]

Biologics Facility : India 1 [audited by multiple regulatory agencies]

Custom Pharma : 3 Technology Development Centers [2 in India & 1 in Cambridge, UK]

Services

R&D Centers : Integrated Product Development Organisation [IPDO] in Hyderabad, India

NCE R&D center in Hyderabad, India

Aurigene R&D center in Bangalore, India


10/27

Company Overview

Looking Back / Looking Forw ard

Business Updates

9


11/27

Recap Effort s in t he last few years (1/3)

Building depth & focus in key markets

Reaching critical mass NAG [>$650 mn]; India & RCIS [each > ~$250 mn]

Building Tier II markets

CIS, Venezuela & South Africa

Turn-around of Germany

Restructured betapharm field force & personnel

Maximized vertical integration of portfolio

Improvement in financial ratios

Improved mix of products to gain higher margins

Scale Leverage: Controlled SG&A growth below sales growth

Capped risky R&D

10


12/27

Recap Robust improvement in f inancial met rics (2/3)

FY08 FY09 FY10 FY11 FY12

1,2421,353

1,428

1,639

1,918

Base Revenue ($ Mn)

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

All figures converted at respectiveperiods average translation rate

8%12%

13%

14%

16%


PAT%tosales

10% 16%18% 18%

24%


ReturnonCapitalEmployed

Base revenues represent revenuesexcluding significant exclusivity sales


240

332 334360

530EBITDA ($ Mn)

All figures converted at respective periods average translation rate

11RoCE mentioned above is pre-tax Operating RoCE adjusted for one timenon cash impairment charges & other non recurring costs

Oneoff

profits

from

exclusivitysales


13/27

Geography Nature Rationale

Markets

Emerging Markets(Brazil, Mexico, Turkey, etc)

GSK Alliance EM play

Japan Joint venture with Fuji Film Japan generics

US Generic Shreveport facility Bristol penicillin facility

Manufacturing Penicillin assets

Russia In-licensing deals Merck / Cipla OTC portfolio

US Specialty Cloderm brand

R&D

Generics Chirotech facility First set of Limited Competition products

(tacrolimus, lansoprazole, fondaparinux, etc)

Proprietary chiral andbiocatalysis technology

Annuity of exclusivity

Biosimilars

First generic launches in India (rituximaband darbepoetin alfa)

Merck-Serono deal Building pipeline Commercializing

biosimilars globally

Bridging capability gaps & setting businesses towards growth

Recap Effort s in t he last few years (3/3)

12


14/27

Addressing fut ure grow th t hrough mult iple levers

Upto FY13

Scale-up in North America

Generics backed by new

launches

Strong growth in EM

(Russia, India & Other

EM)

API lock-ins for key

products

FY13 to FY17

Momentum in US driven

by limited competition

opportunities.

Steady growth across

Emerging Markets India,

Russia, Tier II markets,

GSK Alliance

Emerging Markets scale-

up in biosimilars

Beyond FY17

Strong base business in

US (large base of limited

competition products)

Continued progress in

Emerging Markets

Contribution from

biosimilars in Regulated

Markets

Commercialization of

Proprietary Products

pipeline

Scale-up in Japan

generics business13


15/27

Company Overview

Looking Back / Looking Forward

Business Updates

14


16/27

North America Generics


199

275 301

417

570BaseRevenues($Mn)

Excludingupside

revenues

Upside

Revenues

$156

mn $54

mn $100

mn

Pipeline

Portfolio

26 Rx products ranked Top 3 in market share

Growing portfolio of limited competition products

Key Rx Products Market Share Rank Revenues

Tacrolimus 23% 3

Combinedrevenue

>$200 mn

Lansoprazole 21% 3

Omeprazole Mg OTC > 20% 2

Fondaparinux 28% 2

80 pendingANDAs

(~$45+ bn ofinnovator brandsales value)


17/27

StrategicFocus

Service Level

excellence

Steadygrowing

business

High Qualityportfolio

North America Generics Continued growth in the period upto FY17

9 15-20 new launches annuallywith launch-year revenues in

the range of $100-200mn

9 Mix of limited competition andcomplex generics products to

significantly enhance

9 Continued strong engagementwith strategic customers


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Emerging Markets Russia

5th largest branded generic

Robust & consistent outperformance

of industry growth over the years


101

126

152

196

232Revenue ($ Mn)

8%

13%18%

26%29%


Increasing mix of OTC sales

Top Products Market Share Rank

Omez 67% 1

Nise 66% 1

Ketorol 53% 1

Ciprolet 45% 1

Cetrine 27% 2

Top 5 Rx products Top 2 in market shares

Source: Pharmexpert


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Focus & Build portfolio in select Therapeutic areas :

FocusTherapeuticareas Gastrointestinal Pain Antiinfectives Dermatology Cardiovascular Gynaecology

Existing9 GrowMegabrands

(brands>$20mn)9 ScaleupOTCportfolio

New

9 Buildportfolioofdifferentiated

&difficulttomanufacture

products

9 Biosimilars&Oncology

Emerging Markets Russia


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Emerging Markets India


168177

212244

270Revenue ($ Mn)

Top 10 Brands Market Share Rank

Omez 52% 1

Nise 48% 1

Stamlo 19% 1

Reditux NA ~1

Omez-DSR 25% 1

Stamlo Beta 12% 2

Atocor 5% 6

Razo 13% 1

Razo-D 8% 1

Mintop 33% 1

Strong relationship with GP/CPs

Coverage of > 200,000 doctors

Overall prescription ranking at 9th

Strong market share in Top brands

$ mn

FY09 FY10 FY11 FY12

79

14

18

Growing portfolio of biosimilars


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Focus & Build portfolio in select Therapeutic areas :

FocusTherapeuticareas Gastrointestinal Pain Antiinfectives Dermatology Cardiovascular Oncology

Existing9 Grow&sustainMegabrands

(brands>Rs.30crs)

9 ScaleupBiosimilars&Oncology

1newbiosimilarlaunchannually

New

9 Enhancecustomer

engagementthroughscale

upofDr.ReddysFoundation

forHealthEducation

Emerging Markets India


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Global Gener ics Europe

All figures converted at respective years average translation rate


179 183

144

140 140

Revenue ( Mn)

Europe

Strong cost control measures

Launch of new products outside the scope of

tenders Selective approach of picking portfolio

Visibility of new launches, new customer lock-

ins and improving order book status

Pipeline

68 DMFs filed in FY12

Cumulatively 543 DMFs (US 187)

FY08 FY09 FY10 FY11 FY 12

413 408 430431

497Revenue ($ Mn)

Pharmaceut ical Services & Act ive I ngredients

21


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Codevelopment ComanufacturingCocommercialization

Dr.Reddys

Exclusive&coexclusivemarkets

US marketCocommercialization

MerckSerono

Exclusivemarketswith

Royaltyarrangement

Globaldeal

Portfolioofbiosimilar compoundsinoncology,primarilyMAbs.

Sharingof

development

costs.

Fornoncoveredproducts,Dr.Reddyscontinuestocarryouttherequired

development/manufacturing/

commercialization.

Deal

coverage

Revenueallocations

Dr. Reddys Merck Serono Biosimilars deal


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25/27

ThankYou

ForanyinformationpleasecontactInvestorRelationsCell:

Kedar Upadhye [email protected] /+914066834297

Saunak Savla [email protected] /+914049002135

[email protected] /+914049002135

MilanKalawadia (USA)[email protected] /+19082034931


26/27

FY12 Performance

25*Adjustedfor interestonbonusdebenturesandonetimeimpairmentcharges

AllUSdollarfiguresbasedonconveniencetranslationrateof1USD= 50.89

17 ANDA filings &

68 DMFs filings

$300 mn

16% to sales

42% YoY gr

$500 mn

26% to sales

55% YoY gr

$ 1.9 Billion

30% YoY gr

Revenue EBITDA

Launches& Filings

PAT*


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Key Balance Sheet I t ems

Cash & Cash Equivalents

Net Operating Working Capital

Property, plant & equipment

Goodwill & Intangibles

Loans & borrowings (current & non current)

Equity & Reserves

Mar 2012 Dec 2011

357 326

691 723

653 637

265 298

633 757

1,129 1020

$ mn

o Capital expenditure for nine months FY12 $169 mn

o Current Cash flow hedge options of ~ $609 mn [range of Rs 49 to Rs 50]

AllUSdollarfiguresbasedonconveniencetranslationrateof1USD= 50.89 26

001 investor presentation june2012

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