On May 14, 2021 Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY | NSEIFSC: DRREDDY) reported its consolidated financial results for the fourth quarter and full year ended March 31, 2021 (Press release, Dr Reddy’s, MAY 14, 2021, View Source [SID1234580010])
. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).
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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. Some of our major Covid-19 products are:
Sputnik V vaccine: The trials demonstrated efficacy @ 91.6%, consistent safety and immunogenicity results. In April, 2021 we received Emergency Use Authorization (EUA) for the vaccine. We have launched it today and the first dose of the vaccine was administered. Our priority is to ensure widest reach in the shortest possible time.
Remdesivir: We launched it in India and have ramped up our supplies to meet with the higher demand due to surge of the COVID cases in India.
Avigan (Favipiravir): We are selling it in India and few other markets. We are conducting phase 3 trials in North America for outpatient setting with mild to moderate symptoms. 2-deoxy-D-glucose (2-DG): We developed it in collaboration with DRDO lab. Received EUA as adjunct therapy for hospitalized moderate to severe Covid-19 patients.
Other Covid drugs: We are also working on Molnupiravir, Baricitinib and several other covid drugs for treatment ranging from mild to severe conditions. Revenue Analysis [Q4 and full year FY21] Global Generics (GG)
Revenues from GG segment at Rs. 154.4 billion higher by 12% over FY20, on account of growth across all our markets. We witnessed double digit growth in Europe and India during the year.
Q4 revenue at Rs. 38.7 billion, YoY growth of 6% and QoQ decline of 5%. The YoY growth was driven by branded markets (India and emerging markets), Europe partly offset by decline in NAG. QoQ decline was on account of branded markets & Europe. North America
Revenues from North America Generics for the year at Rs. 70.5 billion, YoY growth of 9%. The year was benefited by new launches, scale up of existing products and a favorable forex rate, which was partially offset by price erosion.
Revenues for Q4 at Rs. 17.5 billion, YoY decline of 3% and QoQ growth of 1%. The YoY decline was primarily on account of higher volumes during Q4 last year due to COVID-19 related stocking up and price erosion. The QoQ growth was driven by volume traction in our base business and new product launches partly offset by price erosion.
During this quarter, we launched 6 new products – Vigabatrin tablets (CGT status granted), Febuxostat tablets, Capecitabine tablets, Fluphenazine Hydrochloride tablets, Lansoprazole OD tablets and Abiraterone Acetate in Canada.
As of 31st March 2021, cumulatively 95 generic filings are pending for approval with the USFDA (92 ANDAs and 3 NDAs under 505(b)(2) route). Out of the pending ANDAs, 47 are Para IVs, and we believe 23 have ‘First to File’ status. Europe
Revenues from Europe for the year at Rs. 15.4 billion. YoY growth of 32%, primarily on account of volume traction in base business, new product launches across our markets including newer markets of France, Italy and Spain and favorable fo ex, which was partially offset by price erosion. 7
Revenues for Q4 at Rs. 4.0 billion, YoY growth of 15% and QoQ decline of 5%. QoQ decline was on account of lower volumes in our base business and price erosion which was partly offset by new products launched during the quarter. India
Revenues from India for the year at Rs. 33.4 billion. Year-on-year growth of 15%, driven by revenues from the acquired business of Wockhardt and contribution from new product launches.
Revenues for Q4 at Rs. 8.4 billion, YoY growth of 23%, QoQ decline of 12%. QoQ decline was led by reduction in covid drugs sales and seasonality. Emerging Markets
Revenues from Emerging Markets for the year at Rs. 35.1 billion, growth of 7%.-Revenues from Russia for the year at Rs. 15.8 billion, YoY decline of 6%. The decline was primarily driven by adverse forex and lower volumes of some of our key molecules.-Revenues from other CIS countries and Romania for the year at Rs. 7.4 billion, YoY growth of 15%. Growth was on account of increase in volumes and new launches.-Revenues from Rest of World (RoW) territories for the year at Rs. 11.8 billion, YoY growth of 25%. Growth primarily on account of new launches and volume traction in key products, partially impacted by price erosion in certain markets.
Revenues for the quarter are Rs. 8.8 billion, YoY growth of 10%, QoQ decline of 8%.-Revenues for Russia for the Q4 at Rs. 4.0 billion, YoY growth of 3%, QoQ decline of 11%.-Revenues from other CIS countries and Romania for the quarter are Rs. 1.9 billion, YoY growth of 7%, QoQ decline of 11%.-Revenues from Rest of World (RoW) territories for this quarter are Rs. 2.9 billion, YoY growth of 24%, QoQ decline of 1%. Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 32.0 billion. Year-on-year growth of 24% driven by new products, increase in volumes of key products of API business and favorable forex partially offset by price erosion.
Revenues for Q4 at Rs. 7.9 billion, YoY growth of 10% and QoQ growth of 13%.
During the year, we have filed 14 DMFs in the US. Proprietary Products (PP) & Others Revenues from PP & Others for the year at Rs. 3.3 billion, YoY decline of 69%. FY20 was higher due to income from sale of the US and select territory rights for two of Neurology franchise products pertaining to PP. Revenues for Q4 are Rs. 632 million. 8 Income Statement Highlights: Gross profit margin for the year at 54.3%, an increase of ~50 bps over previous year. The increase was driven by a better product mix and increased leverage from manufacturing overheads. This was partly offset by price erosion, lower export incentives and benefit from PP out-licensing income in FY 20. Gross profit margin for GG and PSAI business segments are at 59.0% and 29.5% respectively.
Gross profit margin for the Q4 at 53.7% (GG: 57.9%, PSAI: 31.7%).-YoY gross margin increased by ~220 bps, primarily due to a better product mix and increased leverage from manufacturing overheads, partly offset by price erosion and lower export benefits-QoQ gross margin declined by ~10 bps. Selling, general & administrative (SG&A) expenses for FY21 at Rs. 54.6 billion, an increase of 9% on a YoY basis. This increase was primarily due to incremental costs post the integration of the acquired divisions from Wockhardt in this year and increased freight expenses. SG&A expenses for Q4 at Rs. 14.3 billion, YoY increase of 17% and QoQ decline of 1%. SG&A as a % to sales for the full year remained in line with FY20. Impairment charge at Rs. 6.8 billion in FY21, which were taken considering the triggers which occurred during the year. Research & development (R&D) expenses in FY21 at Rs. 16.5 billion. As % to Revenues – FY21: 8.7% | FY20: 8.8%. R&D expenses for Q4 at Rs. 4.1 billion, as % to revenues stood at 8.7%. Our focus continues on building a healthy pipeline of new products across our markets including development of products pertaining to COVID-19 treatment. Other operating income for the year at Rs. 982 million compared to Rs. 4.3 billion in FY20. Previous year included Rs. 3.5 billion received from Celgene pursuant to a settlement agreement in Canada. Net Finance income for the year at Rs. 1.7 billion compared to Rs. 1.5 billion in FY20. The increase is primarily on account of higher foreign exchange gain in current year as compared to FY20. Net finance income in Q4 is Rs. 0.3 billion. Profit before Tax for the year at Rs. 28.3 billion, YoY growth of 57%. Profit before Tax for Q4 is at Rs. 8.1 billion.
Profit after Tax for the year at Rs. 19.1 billion and for Q4 at Rs. 5.5 billion. The tax rate in FY21 is higher due to non-recognition of deferred tax asset (DTA) on losses arising out of impairment. It was lower in FY20 due to recognition of deferred tax asset (DTA) on losses arising out of impairment, recognition of MAT credit, and others in line with the requirements of accounting standards. Diluted earnings per share for the year is Rs. 115.14. Diluted earnings per share for Q4 is Rs. 33.29. Other Highlights: EBITDA for FY21 at Rs. 47.5 billion and the EBITDA margin is 25.0%. EBITDA for Q4 FY21 is at 11.3 billion and the EBITDA margin in 24.0%. Capital expenditure for FY21 is at Rs. 9.7 billion. Capital expenditure for Q4 FY21 is at Rs. 2.9 billion. Free cash-flow at Rs. 24.6 billion before acquisitions. Free cash-flow for Q4 FY21 at Rs. 7.9 billion. Net cash surplus for the company is at Rs. 7.5 billion as on March 31, 2021. Consequently, net debt to equity ratio is (0.04). The Board has recommended payment of a dividend of Rs. 25 per equity share of face value Rs 5/-each (500% of face value) for the year ended March 31, 2021 subject to approval of members. 9 Earnings Call Details (05:30 pm IST, 08:00 am EDT, May 14, 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.