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Dr. Reddy's Investorpresentation november2010

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    Dr. Reddy's Investorpresentation november2010 Dr. Reddy's Investorpresentation november2010 Presentation Transcript

    • Dr. Reddy’s Investor Presentation Novemeber 2010
    • Safe Harbor StatementThis 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 identifiedby 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 and expansion 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 thatoccur after the date the statement or information is made or to account for unanticipated events. 1
    •  Overview Global Generics Pharmaceutical Services and Active Ingredients Proprietary Products Looking Ahead 2
    • Purpose:Providing affordable and innovative medicines for healthier lives.Strategy:Leverage industry-leading science & technology, product offering andcustomer service with execution excellence. 3
    • Overview  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. 4
    • The Last Decade Built the foundations for a strong business. Moved up the value chain. Strengthened capabilities. Achieved scale and global presence. Growth aided by acquisitions. Revenues [USD Mn] 1,510 1,563 1,365 1,250  Germany & Mexico acquisitions  Authorized generic launches 546 463 447 338 380 234 183 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 5All figures converted at respective year’s USD to INR convenience translation rate.
    • Integrated Business ModelPharmaceutical ProprietaryServices & Active Global Generics ProductsIngredients • FY10 Revenue mix 2/3rd of total • Focus on building• FY10 Revenue mix 1/3rd sustainable and profitable of total • Finished dosage branded innovative businesses in business• Amongst the leaders in distribution-driven as well supply of generic APIs as doctor-driven markets • Efforts in new drug globally discovery, differentiated • Strategic ‘focus’ on key formulations & biosimilars• Customers include large markets  North generic America, India, Russia / manufacturers, innovator CIS, Germany companies 6
    • Our Strengths 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 7
    • Infrastructure  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 8
    • Business Priorities Pharmaceutical Proprietary Services & Active Global Generics Products Ingredients Create compelling value Improve depth in key Calibrate investments to for customers by markets through portfolio create a self sustainable leveraging IP, technology expansion and supply model and cost leadership chain excellence Partner of Choice Leadership position Viable Proprietary in key markets Products business 9
    • Financial Targets  FY13 RoCE 25% Revenues $3 bn 10
    • Recent Performance  Results H1 FY11 • $172 mn • $797 mn • 22% to sales Revenue EBITDA Launches PAT & Filings • $111 mn • 73 new launches • 14% to sales • 47 generics filings & 16 DMFs 11All figures converted in USD at convenience translation rate as of Sep 10
    • Key Balance Sheet Items $ mn Sep 2010 Jun 2010 Cash & Cash Equivalents 139 143 Inventory & Receivables 631 611 Property, plant & equipment 570 537 Goodwill & Intangibles 303 298 Loans & borrowings (current & non current) 325 311 Equity & Reserves 1,015 1,009 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 ~ $621 mn [range of Rs 47 to 49] 12All figures converted in USD at convenience translation rate as of Sep 10
    •  Dr. Reddy’s Overview Global Generics Pharmaceutical Services and Active Ingredients Proprietary Products Looking Ahead 13
    • Global GenericsGeographically well diversified with mix of generics and branded generics Global Generics Branded Generics Generics North GSK CIS,Venezuela, Germany UK India Russia Alliance America Romania & ANZ Key Priorities:  Deepening market presence  Differentiated product portfolio  Supply chain excellence 14
    • Global Generics – Regulated Markets 301 Revenue ($ Mn) Excluding upside revenues 272 North America 199 • 15 products ranked among Top 3 in market 109 shares 37 • 74 pending ANDAs // 39 P IVs // 12 FTFs • H1 FY11 Sales - $180 mn FY06 FY07 FY08 FY09 FY10UpsideRevenues  $400 mn $140 mn $55 mn Revenue (Euro Mn) 172 178 182 144 Europe • H1 FY11 Sales – Euro 72 mn • Germany  Significant reduction of SG&A and vertical integration of products to help participate in future tenders more effectively FY07 FY08 FY09 FY10All figures converted at respective years’ convenience translation rate
    • North America: Growing annuity of opportunities Opportunities Product Name FY09 FY10 FY11 FY12 FY13 FY14 FY15 (Product A) X 180 days (Product B) X Exclusivity (Product C) X Sumatriptan X Rivastigmine X Desloratadine Settlements X (5mg / ODT / Pseudoephedrine) / Go early Finasteride 1 mg X Amlodipine Benazepril X Fenofibrate Capsule (43 / 130 mg) Launch date not disclosed Omeprazole Mg OTC X Tacrolimus X Limited Fondaparinux X Competition / Difficult to make Fexofenadine Pseudoephedrine X Zafirlukast X Lansoprazole X 16
    • Global Generics Continued strong growth in Branded Markets 226 Revenue ($ Mn) 179 189 India 133 155 • Top 10 brands ranked among Top 2 in market shares • Portfolio of > 200 brands • H1 FY11 Sales - $129 mn FY06 FY07 FY08 FY09 FY10 152 125Revenue ($ Mn) 101 Russia 79 60 • Top 4 products ranked #1 in market shares • Increasing portfolio of Rx & OTC products • H1 FY11 Sales - $94 mn FY06 FY07 FY08 FY09 FY10 All figures converted at respective years’ convenience translation rate
    •  Dr. Reddy’s Overview Global Generics Pharmaceutical Services and Active Ingredients Proprietary Products Looking Ahead 18
    • Pharmaceutical Services & Active Ingredients Revenue ($ Mn) 407 413 408 430 216 FY06 FY07 FY08 FY09 FY10 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 AmericaNote : All figures converted at the respective years’ average USD to INR translation rates
    •  Dr. Reddy’s Overview Global Generics Pharmaceutical Services and Active Ingredients Proprietary Products Looking Ahead 20
    • Proprietary Products: Biologics Built product development and manufacturing capabilities with a focus on becoming a leading integrated global player in generic biologics. Product Portfolio: Strategic focus on 2nd wave biologics  Products are complex glycosylated proteins requiring specialized competence in development and manufacturing.  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 including approval for European clinical trial product supply.
    • Proprietary Products: DifferentiatedFormulations and NCE Research & Development  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 22
    •  Dr. Reddy’s Overview Global Generics Pharmaceutical Services and Active Ingredients Proprietary Products Looking Ahead
    • 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
    • Thank You