Dr. Reddy's FY08 Revenue at Rs. 50,006 Million; EBITDA at Rs. 9,736 Million

HYDERABAD, India--(Business Wire)--
Dr. Reddy's Laboratories Ltd. (NYSE:RDY) today announced its
audited financial results for the year ended March 31, 2008.

FY08 Key highlights

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-- Revenues at Rs. 50 billion ($1,250 million) in FY08 as against Rs.
65 billion ($1,627 million) in FY07.

-- EBITDA at Rs. 10 billion ($243 million) in FY08 as against Rs. 16
billion ($408 million) in FY07.

-- PAT at Rs. 4.7 billion ($117 million) in FY08 as against Rs. 9.3
billion ($233 million) in FY07

-- Revenues in India (finished dosage) cross $200 million in FY08.

-- Revenues increase by 16% to Rs. 8 billion ($201 million) in
FY08 from Rs. 7 billion ($174 million) in FY07, driven by
performance of key brands as well as new product launches.

-- Reditux, launched in April 2007, contributes Rs. 154 million in
revenues.

-- Company ranked 10th in India. (Source: ORG IMS MAT Mar 08)

-- Revenues in Russia (finished dosage) cross $100 million in FY08.

-- Revenues increase by 13% ($ growth rate of 22%) to Rs. 4.1
billion ($102 million) in FY08 from Rs. 3.6 billion ($90 million)
in FY07 driven by growth in key brands as well as contribution
from new product launches.

-- Company ranked among the fastest growing international branded
generic companies in volume terms. (Source: Pharmexpert MAT Dec
07)

-- Improvement in market rank to 14th position (Source:
Pharmexpert MQT Mar 08)

-- In North America, revenues at Rs. 8 billion ($201 million) in FY08
as against Rs. 23.6 billion in FY07.

-- Revenues increase by 39% ($ growth rate of 49%) to Rs. 7.7
billion ($193 million) excluding the benefit of upsides from
authorized generics and ondansetron exclusivity in FY07 of Rs.
18.1 billion.

-- Revenues from Germany (betapharm) at Rs. 8.2 billion ($205 million)
& EBITDA at $27 million in FY08. YoY sales volume growth of 26%.

-- FY08 revenues reflect the impact of (a) higher rebates to
insurance companies being deducted from revenues from FY08
onwards; (b) pricing pressure; (c) supply constraints for a large
part of the year

-- Improvement in the supply situation in Q4 FY08 results in
increase in market share of betapharm to 2.96% in Mar 08 as
against 1.74% in Apr 07. (Source: Market Report NVI volume, March
2008)

-- Revenues from organic segment of custom pharmaceuticals services
business increase by 53% to Rs. 1.9 billion ($47 million) in FY08
from Rs. 1.2 billion ($31 million) in FY07.

-- Revenues in API at Rs. 12 billion ($295 million) in FY08. Growth
across key markets offset by upsides from sertraline & rabeprazole
in FY07.

-- During the year, the Company launched 89 generic products and made
397 filings across all markets.

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All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs
40.02

Extracted from the Audited Income Statement for the year ended March
31, 2008

FY08 FY07
-------------------------- ----------------- ----------------- -------
Growth
Particulars ($) (Rs.) % ($) (Rs.) % %
-------------------------- ----------------- ----------------- -------
Total Revenues 1,250 50,006 100 1,627 65,095 100 (23)
-------------------------- ----------------- ----------------- -------
Cost of revenues 615 24,598 49 855 34,220 53 (28)
-------------------------- ----------------- ----------------- -------
Gross profit 635 25,408 51 772 30,876 47 (18)
-------------------------- ----------------- ----------------- -------
Selling, General &
Administrative Expenses 379 15,175 30 351 14,051 22 8
-------------------------- ----------------- ----------------- -------
R&D Expenses (1) 88 3,533 7 62 2,463 4 43
-------------------------- ----------------- ----------------- -------
Amortization Expenses 40 1,615 3 39 1,571 2 3
-------------------------- ----------------- ----------------- -------
Write down of Intangible
assets 62 2,489 5 44 1,770 3 41
-------------------------- ----------------- ----------------- -------
Impairment of Goodwill 2 90 0 - - -
-------------------------- ----------------- ----------------- -------
Foreign Exchange
(gain)/loss, net (19) (745) (1) (3) (137) (0) 445
-------------------------- ----------------- ----------------- -------
Other operating
(income)/expense net (3) (107) (0) (2) (67) (0) 59
-------------------------- ----------------- ----------------- -------
Operating Income 84 3,358 7 280 11,224 17 (70)
-------------------------- ----------------- ----------------- -------
Equity in (loss)/income of
affiliates, net 0 2 0 (2) (63) (0)
-------------------------- ----------------- ----------------- -------
Other income/(expenses),
net 1 30 0 (17) (661) (1)
-------------------------- ----------------- ----------------- -------
Income before income taxes
and minority interest 85 3,390 7 262 10,500 16 (68)
-------------------------- ----------------- ----------------- -------
Income taxes
(expense)/benefit 32 1,279 3 (29) (1,177) (2)
-------------------------- ----------------- ----------------- -------
Minority interest 0 9 0 0 3 0 147
-------------------------- ----------------- ----------------- -------
Net income 117 4,678 9 233 9,327 14 (50)
-------------------------- ----------------- ----------------- -------
DEPS 0.69 27.73 1.46 58.56
-------------------------- ----------------- ----------------- -------
Exchange rate 40.02 40.02
-------------------------- ----------------- ----------------- -------

Key Balance Sheet Items
----------------------------------------------------------------------
As on 31 Mar As on 31 Mar
08 07
-------------------------- ----------------- ----------------- -------
Cash and cash equivalents 185 7,421 464 18,588
-------------------------- ----------------- ----------------- -------
Investment in securities
(current & non-current) 119 4,756 28 1,105
-------------------------- ----------------- ----------------- -------
Borrowings from banks
(Short + Long) 488 19,542 619 24,754
-------------------------- ----------------- ----------------- -------
Accounts receivable, net
of allowances 171 6,824 188 7,519
-------------------------- ----------------- ----------------- -------
Inventories 278 11,133 189 7,546
-------------------------- ----------------- ----------------- -------
Property, plant and
equipment, net 419 16,765 311 12,428
-------------------------- ----------------- ----------------- -------

(1) Income recognition under Generics R&D partnership with ICICI
Venture amounted to Rs. nil in FY08 compared to Rs. 453 million in
FY07. Reimbursement of expenses from Perlecan Pharma Private Limited
of Rs. 90 million in FY08 as against Rs 373 million in FY07.

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SEGMENTAL ANALYSIS

Active Pharmaceutical Ingredients (APIs)

-- Revenues at Rs. 11,805 million in FY08 as against Rs. 11,883
million in FY07. Revenues in FY07 included the benefit of
upsides in sertraline & rabeprazole.

-- Revenues outside India at Rs. 9.5 billion in FY 08 as against
Rs. 9.8 billion in FY07.

-- Revenues in North America increase by 88% to Rs. 3.8 billion
in FY08 from Rs. 2 billion in FY07 primarily led by sales of
certain development products & commercialized products.

-- Revenues in India at Rs 2.4 billion in FY08 as against Rs 2.1
billion in FY07. YoY growth of 13% primarily on account of
increase in sales of ramipril.

-- Revenues in rest of the world decrease to Rs. 3.1 billion in
FY08 from Rs. 5.7 billion in FY07. Growth in key markets
offset by normalization of sales in sertraline in FY08
following the upside in FY07.

-- Revenues in Europe at Rs. 2.5 billion in FY08 as against Rs.
2.1 billion in FY07. YOY growth of 19% led by increase in
sales of certain development products & commercialized
products.

-- The Company filed 23 US DMFs during the year taking the total
filings to 127. The company also filed 9 DMFs in Canada, 13
DMFs in Europe and 11 DMFs in RoW.

Generic Finished Dosages

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-- Revenues in this segment at Rs. 17.8 billion in FY08 as against Rs.
33.2 billion in FY07.

-- North America contributed 45% and Europe contributed 55% to the
segment revenues.

-- In North America, revenues at Rs. 8 billion ($ 201 million) in FY08
as against Rs. 23.6 billion in FY07.

-- Revenues increase by 39% to Rs. 7.7 billion in FY08 from Rs.
5.6 billion in FY07 excluding the benefit of upsides from
Authorized Generics & ondansetron exclusivity.

-- Revenues from new products launches at Rs. 617 million in FY08;
11 new products (including 2 OTC products) launched in FY 08.

-- Commenced sales of OTC products; Revenues for FY08 at Rs. 267
million.

-- Combined revenues of fexofenadine & finasteride at Rs. 3,871
million in FY 08.

-- During the year, the Company filed 18 ANDAs taking the total
filings to 122. Total of 58 ANDAs pending at the USFDA addressing
innovator sales of $ 78 billion as per IMS December 2007. During
the year, the company also received 20 approvals including
tentative approvals.

-- In Europe revenues at Rs. 9.7 billion in FY08 as against Rs. 9.6
billion in FY07.

-- Revenues from betapharm (Germany) at Rs. 8.2 billion ($205
million) in FY08 as against Rs. 8 billion in FY07. YoY sales
volume growth of 26%.

-- FY08 revenues reflect the impact of (a) higher rebates to
insurance companies being deducted from revenues from FY08
onwards; (b) pricing pressure; (c) supply constraints for a
large part of the year

-- Improvement in the supply situation in Q4 FY08 results in
increase in market share of betapharm to 2.96% in Mar 08 as
against 1.74% in Apr 07. (Source: Market Report NVI volume,
March 2008)

-- 8 new products launched during the year.

-- Revenues from UK market remains unchanged at Rs. 1.4 billion in
FY08.

-- Revenues from Spain at Rs. 51 million in FY08 as against Rs. 61
million in FY07.

-- During the year the company filed 16 dossiers across Europe.

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Branded Finished Dosages - International

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-- Revenues at Rs. 7.2 billion, an increase of 17% over FY07. This
growth was primarily driven by the performance of Russia, Romania,
Venezuela & Other CIS markets.

-- Revenues in Russia increase by 13% to Rs. 4.1 billion ($102
million) in FY 08 as against Rs. 3.6 billion in FY07. This growth
was primarily driven by increase in sales of key brands of
Keterol, Bion, Omez and new products launches.

-- Revenues from Russia in FY08 cross $100 million milestone.

-- Combined revenues in OTC & Hospital segment contributed 28% to
total revenues in FY08.

-- Improvement in market rank to 14th position. (Source:
Pharmexpert MQT March 2008)

-- The company recorded 18% growth as against the market growth of
17%. (Source: Pharmexpert MAT Dec 2007, retail segment)

-- Revenues in the CIS markets increase by 25% to Rs. 1.5 billion in
FY08 as against Rs. 1.2 billion in FY07. This growth was primarily
driven by increase in sales from Ukraine, Kazakhistan & Belarus.

-- Revenues in Ukraine at Rs. 768 million ($19 million) for FY08
representing a growth of 25% over the previous year.

-- Revenues in RoW markets increase by 16% to Rs. 1.2 billion as
against Rs. 1 billion in FY07. The growth was primarily driven by
increase in sales from key markets.

-- Revenues in Central and Eastern Europe increase by 33% to Rs. 501
million as against Rs. 377 million in FY07.

-- Revenues in Romania at Rs. 466 million ($12 million)
representing a growth of 38% over the previous year.

-- During the year, the company filed 307 dossiers.

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Branded Finished Dosages - India

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-- Revenues in India cross $200 million milestone in FY08.

-- Revenues in India increase by 16% to Rs. 8.1 billion in FY08 from
Rs. 7 billion in FY07. Growth was primarily driven by key brands
of Omez, Razo, Stamlo Beta and Reditux.

-- Revenues from Reditux launched in April 2007 at Rs. 154 million
in FY08.

-- In the rabeprazole category, Razo is the no. 1 prescribed brand
among the gastroenterologists as per CMARC Nov-Feb 08.

-- 20 new products launched during the year, contributing Rs. 309
million in revenues.

-- New product launches in the last 30 months contributed 18% to
total revenues in FY08.

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Custom Pharmaceutical Services (CPS)

Revenues from CPS business at Rs. 4.8 billion in FY08 as against
Rs. 6.6 billion in FY07.

-- Revenues from organic business increase from Rs. 1.2 billion
in FY07 to Rs. 1.9 billion in FY08, driven by growth in
customer base and product portfolio. YoY growth of 53%.

-- Revenues from Mexico at Rs. 3 billion in FY08 as against Rs.
5.4 billion in FY07.

Income Statement Highlights

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-- Gross profit at Rs. 25.4 billion in FY08 as against Rs. 30.9
billion in FY07. Gross profit margins on total revenues at 51% as
against 47% in FY07. In FY07 revenues from authorized generics
contributed 22% to total revenues and earned gross margin
significantly below company average gross margin.

-- R&D investments (net) at 7% of total revenues in FY08 as against 4%
in FY07. Gross R&D investments increase by 10% to Rs. 3.6 billion
in FY08 as against Rs. 3.3 billion in FY07. During the year, the
Company recognized Rs. 90 million under its R&D partnerships as a
benefit to the R&D line item as compared to Rs. 826 million in
FY07.

-- Selling, General & Administration (SG&A) expenses increase by 8% to
Rs. 15.2 billion in FY08 from Rs. 14.1 billion in FY07. The SG&A
ratio to revenue is at 30% in FY08 as against 22% in FY07.

-- Other income (net) at Rs. 30 million in FY08 as against other
expenses (net) of Rs. 661 million in FY07. This is primarily on
account of net interest expense of Rs. 378 million in FY08 as
against net interest expense of Rs. 1,055 million in FY07.

-- Write down of intangibles & impairment of goodwill amounting to Rs.
2.6 billion in FY08 comprising:

-- Write down of Rs. 128 million of product related intangibles at
Spain, recorded in Q4 FY08.

-- Impairment of goodwill of Rs. 90 million relating to the
subsidiary in Atlanta, recorded in Q4 FY08.

-- Write down of Rs. 2.4 billion of product related intangibles at
betapharm, recorded in Q3 FY08.

-- Amortization expenses are at Rs. 1.62 billion as compared to Rs.
1.57 billion in FY07. This largely relates to amortization of
intangibles in betapharm, Spain (acquisition of products) and
acquisition in Mexico.

-- Net income at Rs. 4.7 billion (9% of total revenues) as against Rs.
9.3 billion (14% of total revenues) in FY07. This translates to a
diluted EPS of Rs. 27.73 as against Rs. 58.56 in FY07.

-- During FY08, the Company incurred capital expenditure (net) of Rs.
5.6 billion.

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All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs
40.02

Q4 FY08 Financial Snapshot
Extracted from the Audited Income Statement for the full year ended
March 31, 2008

Q4 FY08 Q4 FY07
------------------------------ ---------------- --------------- ------
Growth
Particulars ($) (Rs.) % ($) (Rs.) % %
------------------------------ ---------------- --------------- ------
Total Revenues 331 13,252 100 389 15,573 100 (15)
------------------------------ ---------------- --------------- ------
Cost of revenues 156 6,229 47 145 5,818 37 7
------------------------------ ---------------- --------------- ------
Gross profit 175 7,023 53 244 9,755 63 (28)
------------------------------ ---------------- --------------- ------
Selling, General &
Administrative Expenses 107 4,275 32 86 3,433 22 24
------------------------------ ---------------- --------------- ------
R&D Expenses (1) 26 1,023 8 21 852 5 20
------------------------------ ---------------- --------------- ------
Amortization Expenses 12 475 4 11 451 3 5
------------------------------ ---------------- --------------- ------
Write down of Intangible
assets 3 128 1 44 1,770 11 (93)
------------------------------ ---------------- --------------- ------
Impairment of Goodwill 2 90 - - 0
------------------------------ ---------------- --------------- ------
Foreign Exchange (gain)/loss,
net (3) (118) (1) (5) (205) (1) (43)
------------------------------ ---------------- --------------- ------
Other operating
(income)/expense net (3) (106) (1) 1 25 0
------------------------------ ---------------- --------------- ------
Operating Income 31 1,257 9 86 3,429 22 (63)
------------------------------ ---------------- --------------- ------
Equity in (loss)/income of
affiliates, net (0) (0) (0) (0) (14) (0) (97)
------------------------------ ---------------- --------------- ------
Other income/(expenses), net (2) (62) (0) 2 98 1 (164)
------------------------------ ---------------- --------------- ------
Income before income taxes and
minority interest 30 1,194 9 88 3,513 23 (66)
------------------------------ ---------------- --------------- ------
Income taxes (expense)/benefit (4) (168) (1) (6) (260) (2) (35)
------------------------------ ---------------- --------------- ------
Minority interest 0 2 0 (0) (1) (0) (274)
------------------------------ ---------------- --------------- ------
Net income 26 1,028 8 81 3,252 21 (68)
------------------------------ ---------------- --------------- ------
DEPS 0.15 6.09 0.51 20.42
------------------------------ ---------------- --------------- ------
Exchange rate 40.02 40.02
------------------------------ ---------------- --------------- ------

(1) Reimbursement of expenses from Perlecan Pharma Private Limited of
Rs. 17 million in Q4 FY08 as against Rs. 85 million in Q4 FY07.

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Business Highlights

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-- Overall global revenues at Rs. 13.2 billion in Q4 FY08 as against
Rs. 15.6 billion in Q4 FY07, representing a decrease of 15%.

-- Overall EBITDA at Rs. 2.6 billion ($65 million) in Q4 FY08 as
against Rs. 6.2 billion ($156 million) in Q4 FY07.

-- Revenues from North America generics business at Rs. 2.5 billion in
Q4 FY08 as against Rs. 5.6 billion in Q4 FY07.

-- Revenues in branded formulations business increase by 22% to Rs.
3.5 billion in Q4 FY08 from Rs. 2.9 billion in Q4 FY07 driven by
growth across key markets.

-- Revenues from India increase by 24% to Rs. 2 billion in Q4
FY08, driven by growth in key brands.

-- Revenues from international markets increase by 19% to Rs. 1.5
billion in Q4 FY08, driven by growth in Romania & other CIS
markets.

-- Revenues from organic Custom Pharmaceuticals Services (CPS)
business increase by 60% at Rs. 698 million in Q4 FY08 as against
Rs. 437 million in Q4 FY07.

-- Overall revenues from CPS business at Rs. 1.4 billion in Q4
FY08 as against Rs. 1.9 billion in Q4 FY07.

-- Revenues from betapharm at Rs. 2.4 billion in Q4 FY08 as against
Rs. 747 million in Q4 FY 07.

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Income Statement Highlights

-- Gross profit at Rs. 7 billion in Q4 FY08 as against Rs. 9.8
billion in Q4 FY07. Gross profit margins on total revenues at
53% as against 63% in Q4 FY07. In Q4 FY07 revenues from
ondansetron exclusivity contributed 16% to total revenues &
earned gross margins significantly above company average gross
margin.

-- R&D investments (net) at 8% of total revenues in Q4 FY08 as
against 5% in Q4 FY07, an increase of 20%. Gross R&D
investments increase by 11% to Rs. 1,040 million in Q4 FY08 as
against Rs. 937 million in Q4 FY07. During the quarter, the
Company recognized Rs. 17 million under its R&D partnerships
as a benefit to the R&D line item as compared to Rs. 85
million in Q4 FY07.

-- Selling, General & Administration (SG&A) expenses increase by
24% to Rs. 4.3 billion in Q4 FY08 as against Rs. 3.4 billion
in Q4 FY07. The SG&A ratio to revenue is at 32% in Q4 FY08 as
against 22% in Q4 FY07.

-- Other expenses (net) at Rs. 62 million in Q4 FY08 as against
other income (net) of Rs. 98 million in Q4 FY07.

-- Amortization expenses at Rs. 475 million in Q4 FY08 as
compared to Rs. 451 million in Q4 FY07. This majorly relates
to intangibles in betapharm, Spain (acquisition of products)
and acquisition in Mexico.

-- Net income at Rs. 1 billion (8% of total revenues) as against
Rs. 3.3 billion (21% of total revenues) in Q4 FY07.

About Dr. Reddy's

Established in 1984, Dr. Reddy's Laboratories (NYSE:RDY) is an
emerging global pharmaceutical company with proven research
capabilities. The Company is vertically integrated with a presence
across the pharmaceutical value chain. It produces finished dosage
forms, active pharmaceutical ingredients and biotechnology products
and markets them globally, with focus on India, US, Europe and Russia.
The Company conducts research in the areas of cancer, diabetes,
cardiovascular, inflammation and bacterial infection.

Disclaimer

This press release includes forward-looking statements, as defined
in the U.S. Private Securities Litigation Reform Act of 1995. We have
based these forward-looking statements on our current expectations and
projections about future events. Such statements involve known and
unknown risks, uncertainties and other factors that may cause actual
results to differ materially. Such factors include, but are not
limited to, changes in local and global economic conditions, our
ability to successfully implement our strategy, the market acceptance
of and demand for our products, our growth and expansion,
technological change and our exposure to market risks. By their
nature, these expectations and projections are only estimates and
could be materially different from actual results in the future.

Notes

1. Financial discussions are on a consolidated basis as per the US
GAAP.

2. Detailed analysis of the financials is available on the
Company's website at www.drreddys.com.

Dr. Reddy's Laboratories Ltd.
Investors and Financial Analysts:
Nikhil Shah, +91-40-66511532
nikhilshah@drreddys.com
Milan Kalawadia, +1-9082034931 (North America)
mkalawadia@drreddys.com
Media:
M Mythili, +91-40-66511620
mythilim@drreddys.com

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