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Dr. Reddy's Investorpresentation november2010

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Dr. Reddy's Investorpresentation november2010

  1. 1. Dr. Reddy’s Investor Presentation Novemeber 2010
  2. 2. Safe Harbor Statement This presentation contains forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements 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 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 prove incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking statements. Any forward-looking statement or information contained in this presentation speaks only as of the date 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
  3. 3.  Overview  Global Generics  Pharmaceutical Services and Active Ingredients  Proprietary Products  Looking Ahead 2
  4. 4. Purpose: Providing affordable and innovative medicines for healthier lives. Strategy: Leverage industry-leading science & technology, product offering and customer service with execution excellence. 3
  5. 5.  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 4
  6. 6. 183 234 338 380 463 447 546 1,510 1,250 1,365 1,563 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Revenues [USD Mn]  Germany & Mexico acquisitions  Authorized generic launches 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 year’s USD to INR convenience translation rate. 5
  7. 7. Integrated Business Model Pharmaceutical Services & Active Ingredients • FY10 Revenue mix 1/3rd of total • Amongst the leaders in supply of generic APIs globally • Customers include generic manufacturers, innovator companies Global Generics • FY10 Revenue mix 2/3rd of total • Finished dosage businesses in distribution-driven as well as doctor-driven markets • Strategic ‘focus’ on key large markets  North America, India, Russia / CIS, Germany Proprietary Products • Focus on building sustainable and profitable branded innovative business • Efforts in new drug discovery, differentiated formulations & biosimilars 6
  8. 8. 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
  9. 9.  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 Infrastructure
  10. 10. Business Priorities Create compelling value for customers by leveraging IP, technology and cost leadership Improve depth in key markets through portfolio expansion and supply chain excellence Calibrate investments to create a self sustainable model Partner of Choice Leadership position in key markets Viable Proprietary Products business Global Generics Pharmaceutical Services & Active Ingredients Proprietary Products 9
  11. 11. Financial Targets  FY13 Revenues $3 bn RoCE 25% 10
  12. 12. 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 & FilingsPAT All figures converted in USD at convenience translation rate as of Sep 10
  13. 13. 12 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 ~ $621 mn [range of Rs 47 to 49] All figures converted in USD at convenience translation rate as of Sep 10
  14. 14.  Dr. Reddy’s Overview  Global Generics  Pharmaceutical Services and Active Ingredients  Proprietary Products  Looking Ahead 13
  15. 15. Global Generics Generics North America Germany UK Branded Generics India Russia GSK Alliance CIS,Venezuela, Romania & ANZ Global Generics Geographically well diversified with mix of generics and branded generics 14 Key Priorities:  Deepening market presence  Differentiated product portfolio  Supply chain excellence
  16. 16. FY06 FY07 FY08 FY09 FY10 37 109 199 272 301 Revenue ($ Mn) Excluding upside revenues Global Generics – Regulated Markets North America • 15 products ranked among Top 3 in market shares • 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&A and vertical integration of products to help participate in future tenders more effectively All figures converted at respective years’ convenience translation rate Upside Revenues  $400 mn $140 mn $55 mn
  17. 17. Opportunities Product Name FY09 FY10 FY11 FY12 FY13 FY14 FY15 180 days Exclusivity (Product A) X (Product B) X (Product C) X Settlements / Go early Sumatriptan X Rivastigmine X Desloratadine (5mg / ODT / Pseudoephedrine) X Finasteride 1 mg X Amlodipine Benazepril X Fenofibrate Capsule (43 / 130 mg) Launch date not disclosed Limited Competition / Difficult to make Omeprazole Mg OTC X Tacrolimus X Fondaparinux X Fexofenadine Pseudoephedrine X Zafirlukast X Lansoprazole X North America: Growing annuity of opportunities 16
  18. 18. Global Generics Continued strong growth in Branded Markets FY06 FY07 FY08 FY09 FY10 133 155 179 189 226 Revenue ($ Mn) India • Top 10 brands ranked among Top 2 in market shares • Portfolio of > 200 brands • H1 FY11 Sales - $129 mn FY06 FY07 FY08 FY09 FY10 60 79 101 125 152 Revenue ($ Mn) Russia • Top 4 products ranked #1 in market shares • Increasing portfolio of Rx & OTC products • H1 FY11 Sales - $94 mn All figures converted at respective years’ convenience translation rate
  19. 19.  Dr. Reddy’s Overview  Global Generics  Pharmaceutical Services and Active Ingredients  Proprietary Products  Looking Ahead 18
  20. 20. FY06 FY07 FY08 FY09 FY10 216 407 413 408 430 Revenue ($ Mn) Pharmaceutical Services & Active Ingredients  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
  21. 21.  Dr. Reddy’s Overview  Global Generics  Pharmaceutical Services and Active Ingredients  Proprietary Products  Looking Ahead 20
  22. 22. 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.
  23. 23. Proprietary Products: Differentiated Formulations and NCE Research & Development 22  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
  24. 24.  Dr. Reddy’s Overview  Global Generics  Pharmaceutical Services and Active Ingredients  Proprietary Products  Looking Ahead
  25. 25. 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
  26. 26. Thank You

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