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Dr Reddy’s Limited Q4FY21 Conference Call Highlights

Dr Reddy’s Limited Q4FY21 Conference Call Highlights

Published on 09 June 2021|
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FY21 Performance:

  • Another year of good financial performance, the PBT adjusted for impairment in both the year and for out-licensing and settlement income in FY’20 grew by 45% for the year.
  • The revenues for the financial year 2021 grew by 9% and stood at Rs 18,972 crores.
  • The gross margin for FY’21 is 54.3%, an improvement of 50 basis points over FY’20.
  • The gross margin for the Global Generics and PSAI were at 59% and 29.5% for the year.
  • The SG&A spend for the year grew by 9% and stands at Rs 5,466 crores
  • EBITDA for the year stood at Rs 4,748 crores and the EBITDA margin is 25%, in line with the aspirational target
  • Profit before tax stood at Rs 2,832 crores for the year & profit after tax for the year stood at Rs 1,915 crores
  • EPS for the year is Rs 115.14
  • Capital Investment stood at Rs 974 during the year
  • The effective tax rate for the year has been at 32.4%, higher primarily because of the non-recognition of deferred tax on losses arising out of impairment.
  • Free cash flow generated during this year post-acquisition was Rs 761 crores
  • North America Generic business sales for the year were $948 million, a growth of 4% over the previous year.
  • Europe business recorded sales of EUR178 million for the year and has grown at a strong rate of 20%.
  • Emerging market sales grew by 7% and are Rs 3,509 crores for the year.
  • India's business recorded sales of Rs 3,342 crores and grew by 15%.
  • As per the IQVIA report of Mar’21, ranked 11th on the MQT and MAT basis.
  • PSAI business sales were $341 million with strong growth of 19%.

 

 

Q4FY21 Performance:

  • Consolidated revenues for the quarter grew by 7% on a year-on-year basis and stood at Rs 4,728 crores. It declined by 4% on a sequential-quarter basis.
  • The consolidated gross profit margin for this quarter has been 53.7%. There has been an increase of 220 bps year-on-year and a decline of 10 bps on quarter-on-quarter.
  • The gross margin for the Global Generics and PSAI was at 57.9% and 31.7% for the quarter.
  • The SG&A expense for the quarter is Rs 1,428 crores, an increase of 17% year-on-year and a decrease of 1% quarter-on-quarter.
  • EBITDA is Rs 1,133 crores and EBITDA margin is 24% for the quarter.
  • Profit before tax stood at Rs 807 crores for the quarter & profit after tax for the quarter stood at Rs 554 crores.
  • EPS for the quarter is Rs 33.29
  • Capital investment stood at Rs 288 crores in this quarter
  • The effective tax rate for the quarter has been 31.4%, impacted because of the derecognition of deferred tax assets.
  • Free cash flow generated during the quarter was Rs 792 crores, supported by mainly profitability and a decrease in operating working capital
  • North America Generics business recorded sales of $237 million for the quarter, with a decline of 5% year-over-year and a growth of 1% on a sequential quarterly basis
  • Europe business recorded sales of EUR45 million this quarter, with a year-on-year growth of 4% and sequential quarter decline of 5%
  • Emerging market sales is Rs 885 crores with a year-on-year growth of 10% and sequential quarter decline of 8%
  • India business recorded sales of Rs 845 crores with a year-on-year growth of 23% and a sequential decline of 12%
  • Launch of two new products in the Indian market during the quarter.
  • PSAI business recorded sales of $108 million, with strong year-on-year growth of 9% and sequential quarter growth of 14%

 

Research & Development and Products:

  • R&D expenditure for the quarter is Rs 409 crores and is at 8.7% of sales.
  • R&D expenditure for FY’21 is Rs 1,654 crores and is at 8.7% of sales, in line with the previous year.
  • Continue to strengthen the pipeline of products across markets with focused R&D investment in value accretive assets.
  • Progressing with Phase-3 trials for Rituximab and work in on for the next wave of biosimilar products, which are in different stages of development.
  • Filed 57 drug master files and 60 formulation products globally
  • Filed multiple supplements and variations as part of manufacturing robustness and cost improvement initiatives to enhance overall competitive position in the US market
  • Efforts are underway to globally monetize key approved and on-market assets.
  • In proprietary products business, progressing with Phase-3 trials for E7777 for CTCL indication.

FY22 Outlook:

  • Growth would be primarily driven by the organic moves, focusing around pipeline monetization, productivity enhancement, diversifications, and capability ramp- up in marketing and digitalization.
  • The strong balance sheet will allow continuing to invest in the right set of inorganic moves to enable long-term growth.
  • Although the environment continues to remain uncertain owing to the global pandemic, the foundation is solid and there are multiple growth levers available for us to sustain this trend in FY’22 and beyond.
  • Entry into a new space of cell therapy with the objective of making cell therapies available to Indian patients at affordable prices.

 

Key Business highlights

  • Successful completion of clinical trials for sputnik V vaccine in India
  • Launch and development of several covid-related drugs
  • Successful integration of business acquired from Wockhardt in India
  • Growth in sales supported by all major markets
  • Attaining EBITDA margin of 25%, consistent with aspiration.
  • Healthy cash flow generation
  • Productivity improvement across manufacturing, R&D, and commercial section of the business.

 

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