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Dr. Reddys Laboratory
Presented By:
Neeraj Balani
Vidya Bandgar
Mayur Bangar
Adesh Bansode
Devendra Bendre
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Index Page
Sr
NO
Particulars Page NO
1 Introduction 3-4
2 Facts 5
3 Products And Services 6-11
4 Milestone 12-13
5 Chairman Speeches 14-156 C.S.R 16-17
7 Financial analysis 18-28
8 Competitors 29
Introduction:
Established in 1984 by entrepreneur scientist Dr. K Anji Reddy, Dr. Reddys Laboratories
(NYSE: RDY) is an emerging global pharmaceutical company.
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As a fully integrated pharmaceutical company, its purpose is to provide affordable and
innovative medicines through its three core businesses:
Pharmaceutical Services and Active Ingredients, comprising our Active
Pharmaceuticals and Custom Pharmaceuticals businesses;
Global Generics, which includes branded and unbranded generics; and
Proprietary Products, which includes New Chemical Entities (NCEs), Differentiated
Formulations, and Generic Biopharmaceuticals.
Its products are marketed globally, with a focus on India, US, Europe and Russia. Dr.
Reddys conducts NCE research in the areas of metabolic disorders, cardiovascular
indications, anti-infectives and inflammation.
Its strong portfolio of businesses, geographies and products gives them an edge in an
increasingly competitive global market and allows them to provide affordable medication
to people across the world, regardless of geographic and socio-economic barriers.
At Dr. Reddys, sustainability is a multi-dimensional aspiration, which has its roots in the
very purpose of our existence providing affordable medicines to people around the world
and meeting unmet medical needs through innovation. Their business, by its very nature,
serves a social good, so they have a far deeper reason than profits alone to drive their
performance.
For them, building a sustainable organization is not a trend they blindly follow; it is
intrinsic to how they have operated for decades. For them, a commitment to sustainability
means a commitment to fulfilling their obligations to all of their stakeholders -- their
customers & partners, employees, shareholders and society. Thus, while optimizing
profitability may be one measurement of their performance, they also judge their success
by their performance with regard to the communities in which they live and work, the
environment and their employees. They understand that it is only by increasing value to all
of these stakeholders that they can build an ever flourishing and lasting organization.
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While sustainability thinking was always woven into the fabric of organization, they
formally declared their intent to institutionalize it in 2004, when they first began to publicly
report on their sustainability practices. They annually publish their Sustainability Report
with direction from the guidelines recommended by Global Report Initiative G3, covering
social, ethical, and economic, safety and environmental aspects of their business.
Facts:
Dr. Reddys is among the largest pharmaceutical companies in India.
First manufacturing company from India to be SOX certified.
It is fastest Indian Pharma Company to cross $1 billion in revenues.
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Business employs about 11000 associates globally.
Among the top 12 generic companies in the US.
Rank 5th in Germany.
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Largest Generic Pharma Company in Russia. Six USFDA approved plants in India, one in Mexico and latest addition, a USFDA
inspected plant in Mirfield, UK, having a total capacity of 3300KL.
Acquired Betapharm .It was the largest overseas acquisition ever by an Indian
company at that point of time.
Over 40 product families marketed in the US,133 ANDAs filled till date,69 ANDAs
pending approval at the USFDA of which 32 are PARA 4 and 19 are FTFs.
About 160 products are marketed in the EU. 200+ branded formulations marketed
in the Rest.
PSAI: 8 USFDA inspected facilities ( 6 in India,1 in Mexico and 1 in UK )
3 Technology Development centers (2 in India, 1 in UK).
One Biologics Development Centre.
One Integrated Product Development Facility
Product and Services:
1) Active Pharma Ingredients
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Dr. Reddys ranked 3rd API player globally. It has strong portfolio of 140 products.
It has 20 products under development at any given point of time. A highly skilled
global team focuses on timely delivery of products, product development,
technology leadership, cost competitiveness, the highest levels of customer service,
and full compliance with regulatory and quality requirements. Dr. Reddy's bulk
manufacturing operations are spread across six units in Andhra Pradesh, India, a
state-of-the-art facility in Mexico and a manufacturing site based in Mirfield, UK
A brief overview of API manufacturing facilities:
UNIT 1:
Set up in 1985
Located at Bollaram, Hyderabad
Has a Reaction Volume Capacity of 130 KL
Is USFDA Inspected and ISO-9001 certified
UNIT 2:
Set up in 1986
Located at Bollaram, HyderabadHas a Reaction Volume Capacity of 152 KL
Is USFDA Inspected and ISO-9001 certified
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UNIT 3:
Set up in 1995
Located at Bollaram, Hyderabad
Has a Reaction Volume Capacity of 71 KL
Is USFDA Inspected and ISO-9001 certified
UNIT 4:
Set up in 1984
Located at Jeedimetla, Hyderabad
Has a Reaction Volume Capacity of 110 KL
Is USFDA Inspected and ISO-9001 certified
UNIT 5:
Set up in 1987
Located at Miriyalaguda, 150 kms from Hyderabad
Has a Reaction Volume Capacity of 700 KL
Is USFDA Inspected and ISO-9001 certified
Has achieved 'Zero Discharge'
UNIT 6:
Set up in 1990
Located at Pydibheemavaram, 800 kms from
Hyderabad
Has a Reaction Volume Capacity of 570 KL
Is USFDA Inspected and ISO-9001 certified
UNIT 7:
Located in Mexico gives niche steroidal API
capacities
Has the worlds largest capacity for sodium naproxen
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UNIT 8:
The chiral and biocatalysis technology at the
Cambridge facility
The scale up capability in Mirfield adds significant
value to the CPS business offerings.
2) Custom Pharma Solutions:
Dr. Reddys is largest CPS player from India.Niche technology-led acquisitionshave made them a one-stop shop for many customers. Acquisition of Roche's API
manufacturing unit in Mexico added the capability to manufacture niche steroidal APIs.
The acquisition of the Small Molecule business of Dow Pharma at its Mirfield and
Cambridge sites in the UK has further strengthened the portfolio and service offerings for
customers
3) Global Generics:
Branded Generics:
Branded Generics portfolio offers over 200 products in the major therapeutic
areas of gastro-intestinal, cardiovascular, pain management, oncology, anti-infectives,
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paediatrics and dermatology. Brands like Omez, Ciprolet, Nise, Enam, Ketorol,
Exifine and Cetrine enjoy leadership positions in several key markets including India,
Romania, Venezuela, Russia & the CIS countries.
Unbranded Generics:
Generics offerings deliver quality at cost-effective prices in the highly
regulated markets of the United States, UK and Germany. In the US, rank among the
top 12 generic companies, with 34 product families being marketed and a large
pipeline is pending approval. In the UK have more than 30 products in the market
Generic Biopharmaceuticals:
Biologics, or biopharmaceuticals, are protein therapeutics drugs that are
produced using recombinant DNA technology. Over the past two decades, Biologics
have revolutionized the treatment landscape in several therapeutic areas, especially in
Oncology & Autoimmune disorders. The biggest advantage of Biologics over
conventional medicines is that they are targeted and highly specific. However,
Biologics are more complex and difficult to develop and are therefore relatively
expensive. As a consequence, in developing countries they are unaffordable for most
people. View generic biopharmaceuticals as an integral part of mid to long term
growth strategy and believe that building depth in development and manufacturing
capabilities will be critical in accessing this opportunity
Strengths:
Dr. Reddys proven generic biopharmaceutical development capabilities with
two marketed products - GrafeelTM (filgrastim) and RedituxTM (rituximab), in
emerging markets. Developed and launched Reditux (rituximab) - the world's firstgeneric monoclonal antibody. The product portfolio spans multiple therapeutic areas -
oncology, auto-immune diseases and CNS. CGMP facilities to manufacture
Biologics, in adherence with global regulatory requirements at a significant cost
advantage
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Pipeline:
Have a pipeline of 8 generic biopharmaceuticals in various stages of
development with two in clinical development stage.
4) New Chemical Entities and Differentiated Formulations:
Dr. Reddys engaged in the discovery, development, and commercialization
of novel small molecule agents to address significant clinical unmet needs. Also they
are developing novel formulations of approved products whose safety and efficacy
profiles are well characterized. Therapeutic areas of focus are bacterial infections,
metabolic disorders, and pain/inflammation.
Focus Therapeutic Areas:
a. Bacterial Infections:
The incidence of hospital acquired infections is growing as drug-
resistant bacteria are becoming more difficult to treat. Dr. Reddys is working
to identify new approaches to treating these infections with products that have
improved efficacy and tolerability profiles.
b. Metabolic Disorders:
Cardiovascular Disease is one of the leading causes of death globally.
Many patients suffering from CVD are also afflicted with insulin resistance,
type 2 diabetes, dyslipidemia, and obesity. While there are several treatment
options for a few of these conditions, a need persists for effective and safe
therapies that address insulin resistance, obesity, low HDL cholesterol and
atherosclerosis.
c. Pain Inflammation:
The prevalence of chronic and acute pain is growing steadily as our
population ages and diagnosis rates improve. Dr. Reddys is developing
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products with improved efficacy and side effect profiles in several areas of
acute and chronic pain.
Milestones:
Year 2004
Acquires Trigenesis gives access to drug delivery technology platforms.
Year 2005
Acquires Roche's API Business at the state-of-the-art manufacturing site in Mexico
with a total investment of USD 59 million.
Announces India's first major co-development and commercialization deal for it's
molecule Balaglitazone (DRF 2593), with Rheoscience.
Announces a unique partnership for the commercialization of ANDAs with ICICI
Venture.
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Year 2006
Revenues touch USD 1 Billion in December 2006.
Dr. Reddy's obtains its second 180-day marketing exclusivity for a generic drug in
the US market with the launch of Ondenesetron Hydrochloride Tablets.
Becomes an Authorized Generic Partner for Mercks Proscar & Zocor in the US
market during 180 day exclusivity period.
Acquires betapharm- the fourth-largest generics company in Germany for a total
enterprise value of 480 million.
Year 2007
Becomes No.1 pharmaceutical company in India in turnover and profitability.
Launches Reditux (Rituximab) the Worlds first biosimilar of a monoclonal
antibody
Blaglitazone (DRF 2593) enters Phase III of clinical trials becoming Indias most
advanced NCE
Year 2008
Acquires BASFs Pharmaceutical manufacturing contract business and related
facility at Shreveport, Louisiana
Acquires Dowpharmas small molecule business at its Mirfield and Cambridge
facilities, UK.
Dr. Reddys formally announces its US Specialty Business, Promius Pharma, LLC.
Year 2009
Announces strategic alliance with GlaxoSmithKline plc to develop and market
select products across emerging markets outside India.
Receives approval for Three INDs.
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Reorganizes Drug Discovery Operations to merge into Aurigene, a wholly owned
independent subsidiary of Dr. Reddy's.
Chairman Speeches:
A quarter of a century has evolved before us, as we have steadily treaded the path of
sustainability, with the purpose of providing affordable and innovative medicines to
all.
For Dr. Reddys, Sustainability goes beyond our conscious attempt to conserve
resources and build sustainable relationships with our business partners; it is also a
vital area of cost savings, revenue generation and competitive advantage.
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Along the journey as we gained fresh perspectives, we have re-energized our goals,
advancing our commitment to the stakeholder community that supports us by
investing in sustainability through collective actions.
Fifteen years ago, we were the first in the Indian pharmaceutical space to embark on
the high-risk, capital intensive journey of discovering new drugs (NCE).
We built well equipped labs and put together a team of highly skilled scientists.
Over the years our company kept its faith in drug discovery and at the same time
has believed in keeping in tune with the interests of all its stakeholders.
Accordingly, we have recently announced the restructuring of our R&D operations.
We will now be placing utmost emphasis on R&D activities that can have asignificant impact on near-term earnings, while not losing focus on long-term
interests of the company.
The Drug Discovery operations in Hyderabad (Discovery Research for us) has
merged with Aurigene, our wholly owned Drug Discovery subsidiary in Bangalore.
A new group called the Proprietary Products group will build the proprietary,
branded R&D portfolio for the company in collaboration with various partners and
other biotechs. This group will be responsible for the existing Intellectual Property(IP) of the company and will ensure effective management of ongoing and future
drug discovery programs.
Giving back to the community that supports us is a mission at Dr. Reddys that we
have been implementing from our earliest days. Over time, our efforts were stepped
up to build long-term value for individuals and society as a whole. Today, we
reinstate our steadfastness towards sustainable development with collective actions
along with our employees, our strategic business partners, involving government
and multilateral organizations, social institutions, universities and academia,
industry, in particular the pharma and biotech sectors. From this vantage point we
look ahead to another silver jubilee of milestones in sustainable business
partnership in the global pharma arena.
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We launched sumatriptan the authorized generic version of Imitrex in the USA
ahead of other competitors. This alone has contributed to Rs. 7,188 million or 10%
of our Companys total revenues for 2008-09.
Dr. Reddys Global Generics revenue increased by 51% to Rs. 49,790 million,
primarily on account of the launch of sumatriptan in North America and strong
performance in Russia and CIS.
Sixteen new products were launched in the US generics market in 2008-09,
including two over-the-counter (OTC) products.
The Pharmaceutical Services and Active Ingredients (PSAI) business grew by 13%
to Rs. 18,758 million; and revenues from the emerging markets grew by 20%.
We made three new acquisitions: DowPharmas Small Molecules facilities in the
UK, located at Mirfield and Cambridge (Chirotech); BASF Corporations
manufacturing facility at Shreveport in Louisiana, USA; and Jet Generici SRL, a
company engaged in the sale of generic finished dosages in Italy. These acquisitions
are already paying dividends, and will act as building blocks for future growth of
your Company.
On a consolidated basis, our Companys revenues (net of excise duties and sales
returns) increased by 39% over the previous year to Rs. 69,441 million in 2008-09
or U.S.$. 1.37 billion.
EBIDTA stood at Rs. 14,529 million in 2008-09, or U.S. $. 286 million.
CSR
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Dr. Reddys engagement with the larger community continues through various
programs conducted by Dr. Reddys Foundation (DRF) on the crucial issues of
Education and Livelihoods.
Addressing the vital link between education and vocational / livelihood based skills,
DRF Livelihood Advancement Business School (LABS) as on July 2009, has
provided livelihood opportunities for over 190,000 youth.
Dr. Reddys also take pride in the English-medium education to children through
four Pudami Neighbourhood Schools in Hyderabad and Ranga Reddy districts. The
Ensuring Children Learn program has reached out to over 16,000 children in 378
schools.
Engaging with the Naandi Foundation, a well-recognised social sector organization,
Dr. Reddys employees contribute under the Power of 10 employee giving program
towards health and education programs, as well as safe motherhood and child
healthcare initiatives.
Naandis WaterHealth project: Andhra Pradesh has 350 plants which has
encouraged us to approach other states in the country. Naandis Giddarbah pilot in
2007 set up 60 plants in 90 days making it the first constituency in India whereevery household has access to drinking water as per WHO norms at a minimal cost
of Rs.1 for 10 litres of water. Today, Punjab and Haryana have 300 and 50 water
plants respectively. Naandi has also set up 20 plants in Rajasthan with another 20
plants planned in Karnataka.
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Financial analysis
P&L account statement
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Shareholding Pattern
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Ratio analysis
1. Sales turnover
Sales turnover is purely the revenue from selling a good or service. It excludes
things like return on investment, interest earned and asset appreciation which are
also included in the annual turnover.
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2. Current Ratio
The ratio is mainly used to give an idea of the company's ability to pay back its
short-term liabilities (debt and payables) with its short-term assets (cash, inventory,
receivables). The higher the current ratio, the more capable the company is of
paying its obligations. A ratio under 1 suggests that the company would be unable
to pay off its obligations if they came due at that point. While this shows the
company is not in good financial health, it does not necessarily mean that it will go
bankrupt - as there are many ways to access financing - but it is definitely not a
good sign.
The current ratio can give a sense of the efficiency of a company's operating cycleor its ability to turn its product into cash. Companies that have trouble getting paid
on their receivables or have long inventory turnover can run into liquidity problems
because they are unable to alleviate their obligations. Because business operations
differ in each industry, it is always more useful to compare companies within the
same industry.
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3. Debt/Equity Ratio :
It is a measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity. It indicates what proportion of equity and debt
the company is using to finance its assets.
Note: Sometimes only interest-bearing, long-term debt is used instead of total
liabilities in the calculation.
Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal
financial statements as well as corporate ones.
A high debt/equity ratio generally means that a company has been aggressive in
financing its growth with debt. This can result in volatile earnings as a result of the
additional interest expense.
If a lot of debt is used to finance increased operations (high debt to equity), the
company could potentially generate more earnings than it would have without
this outside financing. If this were to increase earnings by a greater amount than the
debt cost (interest), then the shareholders benefit as more earnings are being spread
among the same amount of shareholders. However, the cost of this debt financing
may outweigh the return that the company generates on the debt through investment
and business activities and become too much for the company to handle. This can
lead to bankruptcy, which would leave shareholders with nothing.
The debt/equity ratio also depends on the industry in which the company operates
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4. Return On Capital Employed ROCE :
This ratio indicates the efficiency and profitability of a company's capital
investments.
Calculated as:
ROCE should always be higher than the rate at which the company borrows,
otherwise any increase in borrowing will reduce shareholders' earnings.
A variation of this ratio is return on average capital employed (ROACE), which
takes the average of opening and closing capital employed for the time period.
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5. Operating Profit Margin:
This ratio used to measure a company's pricing strategy and operating efficiency.
Calculated as:
Operating margin is a measurement of what proportion of a company's revenue is
left over after paying for variable costs of production such as wages, raw materials,
etc. A healthy operating margin is required for a company to be able to pay for its
fixed costs, such as interest on debt.
Operating margin gives analysts an idea of how much a company makes (beforeinterest and taxes) on each dollar of sales. When looking at operating margin to
determine the quality of a company, it is best to look at the change in operating
margin over time and to compare the company's yearly or quarterly figures to those
of its competitors. If a company's margin is increasing, it is earning more per dollar
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of sales. The higher margin is better.
6. Earnings Per Share - EPS
The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serve as an indicator of a company's profitability.
Calculated as:
When calculating, it is more accurate to use a weighted average number of shares
outstanding over the reporting term, because the number of shares outstanding can
change over time.
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However, data sources sometimes simplify the calculation by using the number of
shares outstanding at the end of the period.
Diluted EPS expands on basic EPS by including the shares of convertibles or
warrants outstanding in the outstanding shares number.
Earnings per share are generally considered to be the single most important variable
in determining a share's price. It is also a major component used to calculate the
price-to-earnings valuation
io.
7. Return On NetWorth:The amount of net income returned as a percentage of shareholders equity. Return on
equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.
ROE is expressed as a percentage and calculated as:
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Return on Equity = Net Income/Shareholder's Equity
Net income is for the full fiscal year (before dividends paid to common stock holders
but after dividends to preferred stock.) Shareholder's equity does not include preferred
shares.
8. Inventory Turnover Ratio
A ratio showing how many times a company's inventory is sold and replaced over a
period.
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The days in the period can then be divided by the inventory turnover formula to
calculate the days it takes to sell the inventory on hand or "inventory turnover days".
Competitors
Teva
Mylan
Merck & Perrigo
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Sandoz
Glaxosmithkline Plc
Watson Pharmaceuticals Inc
Competitors Analysis:
MYLAN LABORATORIES:
Acquired Mercks generic business in Europe in 2007
Acquired controlling interest in matrix
TEVA PHARMACEUTICALS LTD:
Increased its equity ownership in Tianjin Hualida biotechnology co.ltd from
45% to 60%
SANDOZ:
Merged with Ciba-Geigy to form Novartis in 1996 acquired Hexal of
Germany and eon labs of the U.S.