On October 29, 2021 Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY | NSEIFSC: DRREDDY) reported its consolidated financial results for the quarter and the half year ended September 30, 2021 (Press release, Dr Reddy’s, OCT 29, 2021, View Source [SID1234592180]).
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The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS). COVID portfolio We continue to play our role in the fight against Covid-19 by acting proactively to bring multiple preventive and curative treatment options, including a vaccine. Our major Covid-19 products launched till now include Sputnik V vaccine, Remdesivir, Avigan (Favipiravir) and 2-deoxy-D-glucose (2-DG). We have commercialized all these products in India and some of these products in overseas markets.
Currently, we are conducting clinical trials for Sputnik Light, Molnupiravir and are also developing several other covid drugs for treatment ranging from mild to severe conditions. Revenue Analysis Global Generics (GG) Revenues from GG segment at Rs. 47.4 billion:
Year-on-year growth of 19% and sequential quarter growth of 15% was driven by covid portfolio, new product launches and base business volume traction across key markets. However, this was offset partly by price erosion in some of our products. North America Revenues from North America at Rs. 18.9 billion:
Year-on-year growth of 3% and sequential quarter growth of 9%, driven by launch and scale up of new products and increase in volumes of certain of our existing products, which was offset by price erosion in some molecules.
During this quarter, we launched 4 new products. These were Chlordiazepoxide Hydrochloride + Clidinium Bromide Capsules in the US and Lenalidomide capsules, Ertapenem injection and Dasatinib tablets in Canada. We filed two new ANDAs during the quarter. As of 30th September 2021, cumulatively 93 generic filings are pending for approval with the USFDA (90 ANDAs and 3 NDAs under 505(b)(2) route). Out of these 93 pending filings, 46 are Para IVs and we believe 23 have ‘First to File’ status. Europe Revenues from Europe at Rs. 4.1 billion. Year-on-year growth of 10% and sequential quarter growth of 4% was primarily on account of volume traction in base business and new product launches across our markets, which was partially offset by price erosion. India Revenues from India at Rs. 11.4 billion:
Year-on-year growth of 25% and sequential quarter growth of 8% was primarily driven by increase in sales volumes of our existing products, including from our Covid portfolio, contribution from new product launches and increase in sales price of our existing products.
We launched two new products during the quarter. These were Melotryp and Baricax. 5 Emerging Markets Revenues from Emerging Markets at Rs. 13.0 billion. Year-on-year growth of 50% and sequential quarter growth of 42%: Revenues for Russia at Rs. 5.7 billion. Year-on-year growth of 44% and sequential quarter growth of 63% was on account of increase in volumes and sales prices in our existing products and new products launches. We have launched biosimilar bevacizumab in Russia during the quarter.
Revenues from other CIS countries and Romania at Rs. 2.2 billion. Year-on-year growth of 9% and sequential quarter growth of 51% was driven by primarily by new product launches. While sequential quarter growth was supported by increase in sales volumes and prices of certain of our existing products, year-on-year growth was offset partly on account of reduction in volumes and price erosion in some of our existing products.
Revenues from Rest of World (RoW) territories at Rs. 5.1 billion. Year-on-year growth of 90% and sequential growth of 22% was driven by covid portfolio, new products and volume traction in our base business, partially offset by a reduction in sales price of some of our products. Pharmaceutical Services and Active Ingredients (PSAI) Revenues from PSAI at Rs. 8.4 billion with a year-on-year decline of 2% and sequential quarter growth of 11%. While there has been growth from covid portfolio, there was a decline in some of our other products due to lower traction in the volumes and further there has been decrease in sales price for some of our products.
During the quarter we filed two DMFs in the US. Proprietary Products (PP) & Others Revenues from PP & Others at Rs. 1.8 billion. Year-on-year growth of 195% and sequential quarter growth of 238% was primarily on account of recognition of a license fee associated with the sale of our U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/ml, to BioDelivery Sciences International, Inc.Income Statement Highlights: Gross profit margin for the quarter at 53.4%:-Decreased by ~50 bps over previous year majorly on account of price erosion and lower export benefits partially offset by leverage benefit on manufacturing overheads.-Increased by ~120 bps sequentially, driven majorly by leverage benefit on manufacturing overheads partially offset by price erosion.-Gross profit margin for GG and PSAI business segments are at 56.9% and 25.9% respectively.
Selling, general & administrative (SG&A) expenses at Rs. 16.0 billion, increased by 22% on a yearon-year basis and by 6% sequentially. This increase was in line with the business growth and primarily attributable to royalty on sales, annual increments, investments in sales & marketing of our key brands and investments in digitalization. Research & development (R&D) expenses at Rs. 4.5 billion. As % to revenues – Q2 FY22: 7.7% | Q1 FY22: 9.2% | Q2 FY21: 8.9%. We continue our focus on investing in R&D to build a healthy pipeline of new products across our markets including development of products in our biosimilars and generics businesses.
Other operating income at Rs. 1.7 billion compared to Rs. 149 million in Q2 FY21. The increase was on account of recognition of income towards sale of all of our rights relating to our anti-cancer agent E7777 (denileukin diftitox) to Citius Pharmaceuticals, Inc. Net Finance income at Rs. 319 million compared to Rs. 237 million in Q2 FY21. Profit before Tax at Rs. 12.7 billion, increased by 47% year-on-year and by 71% sequentially. Profit after Tax at Rs. 9.9 billion. The effective tax rate is 21.8% for the quarter. Diluted earnings per share is at Rs. 59.65. Other Highlights: EBITDA is at Rs. 15.6 billion and the EBITDA margin is 27.0%. Capital expenditure is at Rs. 3.6 billion. Free cash flow is at Rs. 830 million. Net debt for the company is at Rs. 2.7 billion as on September 30, 2021
. Consequently, net debt to equity ratio is 0.015. 7 Earnings Call Details (05:30 pm IST, 08:00 am EDT, Oct 29, 2021) The management of the Company will host an earnings call to discuss the Company’s financial performance and answer any questions from the participants.