dr. reddy's investor presentation - november2010

8/8/2019 Dr. Reddy's Investor Presentation - November2010

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Dr. Reddys Investor PresentationNovemeber 2010


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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 concernplans, objectives, goals, strategies, future events or performance and underlying assumptions and otherstatements 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 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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Overview

Global Generics

Pharmaceutical Services and Active Ingredients

Proprietary Products

Looking Ahead

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Purpose:

Providing affordable and innovative medicines for healthier lives.

Strategy:

Leverage industry-leading science & technology, product offering and

customer service with execution excellence.

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Global pharmaceutical company focused on active pharmaceutical

ingredients & custom services, generics and proprietary products.

Amongst the largest Indian pharmaceutical companies Revenues of U.S.

$1.56 bn in FY2010 with a CAGR of ~ 25% over the last decade.

Strong vertically integrated portfolio of businesses, geographies &

products.

Overview

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183234

338 380

463 447

546

1,510

1,250

1,3651,563

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

Revenues [USD Mn]

Germany & Mexicoacquisitions

Authorized genericlaunches

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

capabilities. Achieved scale and global presence. Growth aided by acquisitions.

The Last Decade

All figures converted at respective years USD to INR convenience translation rate.5


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I nt egrated Business Model

PharmaceuticalServices & ActiveIngredients

FY10 Revenue mix 1/3rdof total

Amongst the leaders insupply of generic APIsglobally

Customers includegenericmanufacturers, innovatorcompanies

Global Generics

FY10 Revenue mix 2/3rd

of total

Finished dosagebusinesses indistribution-driven as wellas doctor-driven markets

Strategic focus on key

large markets NorthAmerica, India, Russia /CIS, Germany

ProprietaryProducts

Focus on building

sustainable and profitablebranded innovativebusiness

Efforts in new drugdiscovery, differentiatedformulations & biosimilars

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Our St rengths

Industry leading chemistry skills which has resulted in several niche product

opportunities (eg: fondaparinux, fexofenadine-pseudoephedrine, omeprazole mg)

High vertical integration (~75% of APIs sourced internally), global leader in DMF filings

(394 global DMFs as of Sep 2010)

Critical mass of base business in key growing markets

(India, Russia & CIS, North America, Europe)

Maximizing value opportunities through large partnerships (GSK Alliance) and

successful history of monetizing IP

Emerging biosimilars play

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API manufacturing : India 6, Mexico 1, UK 1. All USFDA approved

Finished Dosages :India 6 out of which 2 USFDA approved

manufacturing US 1 approved by USFDA

Biologics Facility : India - 1, audited by multiple regulatory agencies

Custom Pharma : 3 Technology Development Centers 2 in India & 1 in

Services Cambridge, UK

R&D Centers : State-of-the-art Integrated Product Development

Organisation [IPDO] facility,

NCE facility in Hyderabad, India

Aurigene facility in Bangalore

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Infrastructure


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Business Priorities

Create compelling valuefor customers by

leveraging IP, technologyand cost leadership

Improve depth in keymarkets through portfolio

expansion and supplychain excellence

Calibrate investments tocreate a self sustainable

model

Partner of Choice Leadership positionin key markets

Viable ProprietaryProducts business

Global GenericsPharmaceutical

Services & Active

Ingredients

Proprietary

Products

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Financial Target s FY13

Revenues

$3 bn

RoCE

25%

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11

Recent Performance Results H1 FY11

73 new launches

47 generics filings

& 16 DMFs

$111 mn

14% to sales

$172 mn

22% to sales $797 mn

Revenue EBITDA

Launches& Filings

PAT

All figures converted in USD at convenience translation rate as of Sep 10


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Key Balance Sheet Items

Cash & Cash Equivalents

Inventory & Receivables

Property, plant & equipment

Goodwill & Intangibles

Loans & borrowings (current & non current)

Equity & Reserves

Sep 2010 Jun 2010

139 143

631 611

570 537

303 298

325 311

1,015 1,009

$ mn

o Net Debt Equity ratio as of Sep 10 0.18

o Capital expenditure for H1 FY11 $91 mn

o Current Cash flow hedge options of ~ $621 mn [range of Rs 47 to 49]All figures converted in USD at convenience translation rate as of Sep 10


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Dr. Reddys Overview

Global Generics



Looking Ahead

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Global

Generics

Generics

NorthAmerica

Germany UK

BrandedGenerics

India RussiaGSK

AllianceCIS,Venezuela,Romania & ANZ

Global Gener icsGeographically well diversified with mix of generics and branded generics

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Key Priorities:

Deepening market presence

Differentiated product portfolio

Supply chain excellence


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FY06 FY07 FY08 FY09 FY10

37

109

199

272

301Revenue ($ Mn)Excluding upside revenues

Global Generics Regulated Markets

North America

15 products ranked among Top 3 in marketshares

74 pending ANDAs // 39 P IVs // 12 FTFs

H1 FY11 Sales - $180 mn

FY07 FY08 FY09 FY10

172 178 182

144

Revenue (Euro Mn)

Europe H1 FY11 Sales Euro 72 mn

Germany Significant reduction of SG&Aand vertical integration of products to helpparticipate in future tenders more effectively

All figures converted at respective years convenience translation rate

UpsideRevenues $400 mn $140 mn $55 mn


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Opportunities Product Name FY09 FY10 FY11 FY12 FY13 FY14 FY15

180 daysExclusivity

(Product A) X

(Product B) X

(Product C) X

Settlements/ Go early

Sumatriptan X

Rivastigmine X

Desloratadine(5mg / ODT / Pseudoephedrine) X

Finasteride 1 mg X

Amlodipine Benazepril X

Fenofibrate Capsule (43 / 130 mg) Launch date not disclosed

LimitedCompetition /

Difficult to make

Omeprazole Mg OTC X

Tacrolimus X

Fondaparinux X

Fexofenadine Pseudoephedrine X

Zafirlukast X

Lansoprazole X

Nort h America: Grow ing annuit y of opportunit ies

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Global Generics

Continued strong growth in Branded Markets


133155

179 189

226Revenue ($ Mn)

India Top 10 brands ranked among Top 2 in

market shares

Portfolio of > 200 brands



60 79

101

125

152

Revenue ($ Mn) Russia

Top 4 products ranked #1 in market shares

Increasing portfolio of Rx & OTC products


All figures converted at respective years convenience translation rate


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Dr. Reddys Overview

Global Generics



Looking Ahead

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216

407 413 408 430

Revenue ($ Mn)

Pharm aceut ical Services & Act ive I ngredient s

Stable business catering to both internal & external customers

Internal sourcing of API for generics > 75%

Strong portfolio of API resulting in higher market shares for vertically

integrated generics

DMF filings 394 of which 215 in North America

Note : All figures converted at the respective years average USD to INR translation rates


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Dr. Reddys Overview

Global Generics



Looking Ahead

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Propr ietary Products: Biologics

Built product development and manufacturing capabilities with a focus on becoming a leading integratedglobal player in generic biologics.

Product Portfolio: Strategic focus on 2nd wave biologics

Products are complex glycosylated proteins requiring specialized competence in development andmanufacturing.

Global brand sales of development portfolio ~ $40+ bn

Our portfolio for select emerging markets represents an early entry opportunity

Continue to work on monetizing US & EU opportunity

Established Development Capabilities Three commercial products filgrastim, rituximab & darbapoetin launched in multiple emerging markets; Revenues: H1 FY11 ~$9 mn

Recently filed our fourth biosimilar in India ; Five other products in pipeline

Several years of proven cGMP manufacturing experience with a history of successful audits includingapproval for European clinical trial product supply.

P i P d Diff i d


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Propr ietary Products: Different iatedFormulat ions and NCE Research & Development

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Hybrid Differentiated Formulations/NCE Strategy anchored around : Specialty indications with feasibility to self-commercialize

Higher conversion from preclinical-to-clinic

Enabled by core capabilities :

Strong internal formulation development team focused on oral and topical drug delivery

Enabling alliances in areas of alternative drug delivery (intranasals, injectables)

Resulting (from FY 2012 onwards) in an annual output of 3-5 quality clinical candidates

in/from : High value differentiated formulations programs (US/EU-targeted) in

pain, hospital, dermatology

Complementary NCE pipeline focusing on same indications

GSK Differentiated Formulations alliance


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Dr. Reddys Overview

Global Generics



Looking Ahead


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Key Messages

FY 11 Guidance : RoCE of 18 22%

FY13 Goal : Revenues $3 bn & RoCE of 25%

Amongst the leading pipeline of ANDA & DMF filings globally

Strong & sustained cash flows expected from product opportunities such

as Omeprazole Mg OTC, Tacrolimus & Fondaparinux

Attractive Emerging Markets presence with stronghold in two key BRIC

markets India & Russia

Strategic alliance with GSK for Emerging Markets

Emerging biosimilars play


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Thank You

dr. reddy's investor presentation - november2010

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