Dr Reddy Word Doc Final

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Dr. Reddys Laboratory

Presented By:

Neeraj Balani

Vidya Bandgar

Mayur Bangar

Adesh Bansode

Devendra Bendre

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Index Page

Sr

NO

Particulars Page NO

1 Introduction 3-4

2 Facts 5

3 Products And Services 6-11

4 Milestone 12-13

5 Chairman Speeches 14-156 C.S.R 16-17

7 Financial analysis 18-28

8 Competitors 29

Introduction:

Established in 1984 by entrepreneur scientist Dr. K Anji Reddy, Dr. Reddys Laboratories

(NYSE: RDY) is an emerging global pharmaceutical company.

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As a fully integrated pharmaceutical company, its purpose is to provide affordable and

innovative medicines through its three core businesses:

Pharmaceutical Services and Active Ingredients, comprising our Active

Pharmaceuticals and Custom Pharmaceuticals businesses;

Global Generics, which includes branded and unbranded generics; and

Proprietary Products, which includes New Chemical Entities (NCEs), Differentiated

Formulations, and Generic Biopharmaceuticals.

Its products are marketed globally, with a focus on India, US, Europe and Russia. Dr.

Reddys conducts NCE research in the areas of metabolic disorders, cardiovascular

indications, anti-infectives and inflammation.

Its strong portfolio of businesses, geographies and products gives them an edge in an

increasingly competitive global market and allows them to provide affordable medication

to people across the world, regardless of geographic and socio-economic barriers.

At Dr. Reddys, sustainability is a multi-dimensional aspiration, which has its roots in the

very purpose of our existence providing affordable medicines to people around the world

and meeting unmet medical needs through innovation. Their business, by its very nature,

serves a social good, so they have a far deeper reason than profits alone to drive their

performance.

For them, building a sustainable organization is not a trend they blindly follow; it is

intrinsic to how they have operated for decades. For them, a commitment to sustainability

means a commitment to fulfilling their obligations to all of their stakeholders -- their

customers & partners, employees, shareholders and society. Thus, while optimizing

profitability may be one measurement of their performance, they also judge their success

by their performance with regard to the communities in which they live and work, the

environment and their employees. They understand that it is only by increasing value to all

of these stakeholders that they can build an ever flourishing and lasting organization.

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While sustainability thinking was always woven into the fabric of organization, they

formally declared their intent to institutionalize it in 2004, when they first began to publicly

report on their sustainability practices. They annually publish their Sustainability Report

with direction from the guidelines recommended by Global Report Initiative G3, covering

social, ethical, and economic, safety and environmental aspects of their business.

Facts:

Dr. Reddys is among the largest pharmaceutical companies in India.

First manufacturing company from India to be SOX certified.

It is fastest Indian Pharma Company to cross $1 billion in revenues.

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Business employs about 11000 associates globally.

Among the top 12 generic companies in the US.

Rank 5th in Germany.

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Largest Generic Pharma Company in Russia. Six USFDA approved plants in India, one in Mexico and latest addition, a USFDA

inspected plant in Mirfield, UK, having a total capacity of 3300KL.

Acquired Betapharm .It was the largest overseas acquisition ever by an Indian

company at that point of time.

Over 40 product families marketed in the US,133 ANDAs filled till date,69 ANDAs

pending approval at the USFDA of which 32 are PARA 4 and 19 are FTFs.

About 160 products are marketed in the EU. 200+ branded formulations marketed

in the Rest.

PSAI: 8 USFDA inspected facilities ( 6 in India,1 in Mexico and 1 in UK )

3 Technology Development centers (2 in India, 1 in UK).

One Biologics Development Centre.

One Integrated Product Development Facility

Product and Services:

1) Active Pharma Ingredients

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Dr. Reddys ranked 3rd API player globally. It has strong portfolio of 140 products.

It has 20 products under development at any given point of time. A highly skilled

global team focuses on timely delivery of products, product development,

technology leadership, cost competitiveness, the highest levels of customer service,

and full compliance with regulatory and quality requirements. Dr. Reddy's bulk

manufacturing operations are spread across six units in Andhra Pradesh, India, a

state-of-the-art facility in Mexico and a manufacturing site based in Mirfield, UK

A brief overview of API manufacturing facilities:

UNIT 1:

Set up in 1985

Located at Bollaram, Hyderabad

Has a Reaction Volume Capacity of 130 KL

Is USFDA Inspected and ISO-9001 certified

UNIT 2:

Set up in 1986

Located at Bollaram, HyderabadHas a Reaction Volume Capacity of 152 KL


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UNIT 3:

Set up in 1995

Located at Bollaram, Hyderabad



UNIT 4:

Set up in 1984

Located at Jeedimetla, Hyderabad



UNIT 5:

Set up in 1987

Located at Miriyalaguda, 150 kms from Hyderabad



Has achieved 'Zero Discharge'

UNIT 6:

Set up in 1990

Located at Pydibheemavaram, 800 kms from

Hyderabad



UNIT 7:

Located in Mexico gives niche steroidal API

capacities

Has the worlds largest capacity for sodium naproxen

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UNIT 8:

The chiral and biocatalysis technology at the

Cambridge facility

The scale up capability in Mirfield adds significant

value to the CPS business offerings.

2) Custom Pharma Solutions:

Dr. Reddys is largest CPS player from India.Niche technology-led acquisitionshave made them a one-stop shop for many customers. Acquisition of Roche's API

manufacturing unit in Mexico added the capability to manufacture niche steroidal APIs.

The acquisition of the Small Molecule business of Dow Pharma at its Mirfield and

Cambridge sites in the UK has further strengthened the portfolio and service offerings for

customers

3) Global Generics:

Branded Generics:

Branded Generics portfolio offers over 200 products in the major therapeutic

areas of gastro-intestinal, cardiovascular, pain management, oncology, anti-infectives,

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paediatrics and dermatology. Brands like Omez, Ciprolet, Nise, Enam, Ketorol,

Exifine and Cetrine enjoy leadership positions in several key markets including India,

Romania, Venezuela, Russia & the CIS countries.

Unbranded Generics:

Generics offerings deliver quality at cost-effective prices in the highly

regulated markets of the United States, UK and Germany. In the US, rank among the

top 12 generic companies, with 34 product families being marketed and a large

pipeline is pending approval. In the UK have more than 30 products in the market

Generic Biopharmaceuticals:

Biologics, or biopharmaceuticals, are protein therapeutics drugs that are

produced using recombinant DNA technology. Over the past two decades, Biologics

have revolutionized the treatment landscape in several therapeutic areas, especially in

Oncology & Autoimmune disorders. The biggest advantage of Biologics over

conventional medicines is that they are targeted and highly specific. However,

Biologics are more complex and difficult to develop and are therefore relatively

expensive. As a consequence, in developing countries they are unaffordable for most

people. View generic biopharmaceuticals as an integral part of mid to long term

growth strategy and believe that building depth in development and manufacturing

capabilities will be critical in accessing this opportunity

Strengths:

Dr. Reddys proven generic biopharmaceutical development capabilities with

two marketed products - GrafeelTM (filgrastim) and RedituxTM (rituximab), in

emerging markets. Developed and launched Reditux (rituximab) - the world's firstgeneric monoclonal antibody. The product portfolio spans multiple therapeutic areas -

oncology, auto-immune diseases and CNS. CGMP facilities to manufacture

Biologics, in adherence with global regulatory requirements at a significant cost

advantage

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Pipeline:

Have a pipeline of 8 generic biopharmaceuticals in various stages of

development with two in clinical development stage.

4) New Chemical Entities and Differentiated Formulations:

Dr. Reddys engaged in the discovery, development, and commercialization

of novel small molecule agents to address significant clinical unmet needs. Also they

are developing novel formulations of approved products whose safety and efficacy

profiles are well characterized. Therapeutic areas of focus are bacterial infections,

metabolic disorders, and pain/inflammation.

Focus Therapeutic Areas:

a. Bacterial Infections:

The incidence of hospital acquired infections is growing as drug-

resistant bacteria are becoming more difficult to treat. Dr. Reddys is working

to identify new approaches to treating these infections with products that have

improved efficacy and tolerability profiles.

b. Metabolic Disorders:

Cardiovascular Disease is one of the leading causes of death globally.

Many patients suffering from CVD are also afflicted with insulin resistance,

type 2 diabetes, dyslipidemia, and obesity. While there are several treatment

options for a few of these conditions, a need persists for effective and safe

therapies that address insulin resistance, obesity, low HDL cholesterol and

atherosclerosis.

c. Pain Inflammation:

The prevalence of chronic and acute pain is growing steadily as our

population ages and diagnosis rates improve. Dr. Reddys is developing

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products with improved efficacy and side effect profiles in several areas of

acute and chronic pain.

Milestones:

Year 2004

Acquires Trigenesis gives access to drug delivery technology platforms.

Year 2005

Acquires Roche's API Business at the state-of-the-art manufacturing site in Mexico

with a total investment of USD 59 million.

Announces India's first major co-development and commercialization deal for it's

molecule Balaglitazone (DRF 2593), with Rheoscience.

Announces a unique partnership for the commercialization of ANDAs with ICICI

Venture.

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Year 2006

Revenues touch USD 1 Billion in December 2006.

Dr. Reddy's obtains its second 180-day marketing exclusivity for a generic drug in

the US market with the launch of Ondenesetron Hydrochloride Tablets.

Becomes an Authorized Generic Partner for Mercks Proscar & Zocor in the US

market during 180 day exclusivity period.

Acquires betapharm- the fourth-largest generics company in Germany for a total

enterprise value of 480 million.

Year 2007

Becomes No.1 pharmaceutical company in India in turnover and profitability.

Launches Reditux (Rituximab) the Worlds first biosimilar of a monoclonal

antibody

Blaglitazone (DRF 2593) enters Phase III of clinical trials becoming Indias most

advanced NCE

Year 2008

Acquires BASFs Pharmaceutical manufacturing contract business and related

facility at Shreveport, Louisiana

Acquires Dowpharmas small molecule business at its Mirfield and Cambridge

facilities, UK.

Dr. Reddys formally announces its US Specialty Business, Promius Pharma, LLC.

Year 2009

Announces strategic alliance with GlaxoSmithKline plc to develop and market

select products across emerging markets outside India.

Receives approval for Three INDs.

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Reorganizes Drug Discovery Operations to merge into Aurigene, a wholly owned

independent subsidiary of Dr. Reddy's.

Chairman Speeches:

A quarter of a century has evolved before us, as we have steadily treaded the path of

sustainability, with the purpose of providing affordable and innovative medicines to

all.

For Dr. Reddys, Sustainability goes beyond our conscious attempt to conserve

resources and build sustainable relationships with our business partners; it is also a

vital area of cost savings, revenue generation and competitive advantage.

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Along the journey as we gained fresh perspectives, we have re-energized our goals,

advancing our commitment to the stakeholder community that supports us by

investing in sustainability through collective actions.

Fifteen years ago, we were the first in the Indian pharmaceutical space to embark on

the high-risk, capital intensive journey of discovering new drugs (NCE).

We built well equipped labs and put together a team of highly skilled scientists.

Over the years our company kept its faith in drug discovery and at the same time

has believed in keeping in tune with the interests of all its stakeholders.

Accordingly, we have recently announced the restructuring of our R&D operations.

We will now be placing utmost emphasis on R&D activities that can have asignificant impact on near-term earnings, while not losing focus on long-term

interests of the company.

The Drug Discovery operations in Hyderabad (Discovery Research for us) has

merged with Aurigene, our wholly owned Drug Discovery subsidiary in Bangalore.

A new group called the Proprietary Products group will build the proprietary,

branded R&D portfolio for the company in collaboration with various partners and

other biotechs. This group will be responsible for the existing Intellectual Property(IP) of the company and will ensure effective management of ongoing and future

drug discovery programs.

Giving back to the community that supports us is a mission at Dr. Reddys that we

have been implementing from our earliest days. Over time, our efforts were stepped

up to build long-term value for individuals and society as a whole. Today, we

reinstate our steadfastness towards sustainable development with collective actions

along with our employees, our strategic business partners, involving government

and multilateral organizations, social institutions, universities and academia,

industry, in particular the pharma and biotech sectors. From this vantage point we

look ahead to another silver jubilee of milestones in sustainable business

partnership in the global pharma arena.

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We launched sumatriptan the authorized generic version of Imitrex in the USA

ahead of other competitors. This alone has contributed to Rs. 7,188 million or 10%

of our Companys total revenues for 2008-09.

Dr. Reddys Global Generics revenue increased by 51% to Rs. 49,790 million,

primarily on account of the launch of sumatriptan in North America and strong

performance in Russia and CIS.

Sixteen new products were launched in the US generics market in 2008-09,

including two over-the-counter (OTC) products.

The Pharmaceutical Services and Active Ingredients (PSAI) business grew by 13%

to Rs. 18,758 million; and revenues from the emerging markets grew by 20%.

We made three new acquisitions: DowPharmas Small Molecules facilities in the

UK, located at Mirfield and Cambridge (Chirotech); BASF Corporations

manufacturing facility at Shreveport in Louisiana, USA; and Jet Generici SRL, a

company engaged in the sale of generic finished dosages in Italy. These acquisitions

are already paying dividends, and will act as building blocks for future growth of

your Company.

On a consolidated basis, our Companys revenues (net of excise duties and sales

returns) increased by 39% over the previous year to Rs. 69,441 million in 2008-09

or U.S.$. 1.37 billion.

EBIDTA stood at Rs. 14,529 million in 2008-09, or U.S. $. 286 million.

CSR

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Dr. Reddys engagement with the larger community continues through various

programs conducted by Dr. Reddys Foundation (DRF) on the crucial issues of

Education and Livelihoods.

Addressing the vital link between education and vocational / livelihood based skills,

DRF Livelihood Advancement Business School (LABS) as on July 2009, has

provided livelihood opportunities for over 190,000 youth.

Dr. Reddys also take pride in the English-medium education to children through

four Pudami Neighbourhood Schools in Hyderabad and Ranga Reddy districts. The

Ensuring Children Learn program has reached out to over 16,000 children in 378

schools.

Engaging with the Naandi Foundation, a well-recognised social sector organization,

Dr. Reddys employees contribute under the Power of 10 employee giving program

towards health and education programs, as well as safe motherhood and child

healthcare initiatives.

Naandis WaterHealth project: Andhra Pradesh has 350 plants which has

encouraged us to approach other states in the country. Naandis Giddarbah pilot in

2007 set up 60 plants in 90 days making it the first constituency in India whereevery household has access to drinking water as per WHO norms at a minimal cost

of Rs.1 for 10 litres of water. Today, Punjab and Haryana have 300 and 50 water

plants respectively. Naandi has also set up 20 plants in Rajasthan with another 20

plants planned in Karnataka.

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Financial analysis

P&L account statement

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Shareholding Pattern

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Ratio analysis

1. Sales turnover

Sales turnover is purely the revenue from selling a good or service. It excludes

things like return on investment, interest earned and asset appreciation which are

also included in the annual turnover.

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2. Current Ratio

The ratio is mainly used to give an idea of the company's ability to pay back its

short-term liabilities (debt and payables) with its short-term assets (cash, inventory,

receivables). The higher the current ratio, the more capable the company is of

paying its obligations. A ratio under 1 suggests that the company would be unable

to pay off its obligations if they came due at that point. While this shows the

company is not in good financial health, it does not necessarily mean that it will go

bankrupt - as there are many ways to access financing - but it is definitely not a

good sign.

The current ratio can give a sense of the efficiency of a company's operating cycleor its ability to turn its product into cash. Companies that have trouble getting paid

on their receivables or have long inventory turnover can run into liquidity problems

because they are unable to alleviate their obligations. Because business operations

differ in each industry, it is always more useful to compare companies within the

same industry.

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3. Debt/Equity Ratio :

It is a measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and debt

the company is using to finance its assets.

Note: Sometimes only interest-bearing, long-term debt is used instead of total

liabilities in the calculation.

Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal

financial statements as well as corporate ones.

A high debt/equity ratio generally means that a company has been aggressive in

financing its growth with debt. This can result in volatile earnings as a result of the

additional interest expense.

If a lot of debt is used to finance increased operations (high debt to equity), the

company could potentially generate more earnings than it would have without

this outside financing. If this were to increase earnings by a greater amount than the

debt cost (interest), then the shareholders benefit as more earnings are being spread

among the same amount of shareholders. However, the cost of this debt financing

may outweigh the return that the company generates on the debt through investment

and business activities and become too much for the company to handle. This can

lead to bankruptcy, which would leave shareholders with nothing.

The debt/equity ratio also depends on the industry in which the company operates

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4. Return On Capital Employed ROCE :

This ratio indicates the efficiency and profitability of a company's capital

investments.

Calculated as:

ROCE should always be higher than the rate at which the company borrows,

otherwise any increase in borrowing will reduce shareholders' earnings.

A variation of this ratio is return on average capital employed (ROACE), which

takes the average of opening and closing capital employed for the time period.

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5. Operating Profit Margin:

This ratio used to measure a company's pricing strategy and operating efficiency.

Calculated as:

Operating margin is a measurement of what proportion of a company's revenue is

left over after paying for variable costs of production such as wages, raw materials,

etc. A healthy operating margin is required for a company to be able to pay for its

fixed costs, such as interest on debt.

Operating margin gives analysts an idea of how much a company makes (beforeinterest and taxes) on each dollar of sales. When looking at operating margin to

determine the quality of a company, it is best to look at the change in operating

margin over time and to compare the company's yearly or quarterly figures to those

of its competitors. If a company's margin is increasing, it is earning more per dollar

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of sales. The higher margin is better.

6. Earnings Per Share - EPS

The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serve as an indicator of a company's profitability.

Calculated as:

When calculating, it is more accurate to use a weighted average number of shares

outstanding over the reporting term, because the number of shares outstanding can

change over time.

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However, data sources sometimes simplify the calculation by using the number of

shares outstanding at the end of the period.

Diluted EPS expands on basic EPS by including the shares of convertibles or

warrants outstanding in the outstanding shares number.

Earnings per share are generally considered to be the single most important variable

in determining a share's price. It is also a major component used to calculate the

price-to-earnings valuation

io.

7. Return On NetWorth:The amount of net income returned as a percentage of shareholders equity. Return on

equity measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested.

ROE is expressed as a percentage and calculated as:

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Return on Equity = Net Income/Shareholder's Equity

Net income is for the full fiscal year (before dividends paid to common stock holders

but after dividends to preferred stock.) Shareholder's equity does not include preferred

shares.

8. Inventory Turnover Ratio

A ratio showing how many times a company's inventory is sold and replaced over a

period.

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The days in the period can then be divided by the inventory turnover formula to

calculate the days it takes to sell the inventory on hand or "inventory turnover days".

Competitors

Teva

Mylan

Merck & Perrigo

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Sandoz

Glaxosmithkline Plc

Watson Pharmaceuticals Inc

Competitors Analysis:

MYLAN LABORATORIES:

Acquired Mercks generic business in Europe in 2007

Acquired controlling interest in matrix

TEVA PHARMACEUTICALS LTD:

Increased its equity ownership in Tianjin Hualida biotechnology co.ltd from

45% to 60%

SANDOZ:

Merged with Ciba-Geigy to form Novartis in 1996 acquired Hexal of

Germany and eon labs of the U.S.

Dr Reddy Word Doc Final

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