Dr. Reddy`s FY09 Revenues at Rs. 69,441 Million, EBITDA at Rs. 14,505 Million

HYDERABAD, India--(Business Wire)--
Dr. Reddy`s Laboratories Ltd. (NYSE:RDY) today announced its unaudited financial
results for the year ended March 31, 2009 under International Financial
Reporting Standards (IFRS).

FY09 Key Highlights

* Overall revenues at Rs. 69.4 billion ($1.4 billion) in FY09 as against Rs.
50.0 billion ($983 million) in FY08, representing a growth of 39%.

* The growth was driven by the successful launch of the authorized generic
version of GlaxoSmithKline`s Imitrex (generic version: sumatriptan succinate),
in late November 2008 and by the key markets of North America and Russia.
* Excluding revenues from Sumatriptan, the YoY growth is at 24%.

* EBITDA at Rs. 14.5 billion ($285 million) in FY09 as against Rs. 9.7 billion
($190 million) in FY08, representing a growth of 50%.
* During the year ended March 31, 2009, in our German subsidiary, betapharm,
there has been a visible shift towards the tender based supply model with a
continuing decrease in market prices. Pursuant to this adverse market
development, the Company tested its carrying value of intangibles and goodwill
at betapharm for impairment as required under the accounting standards. The
impairment testing indicated that the carrying values of goodwill and some of
the product related intangibles were higher than their respective recoverable
values and accordingly, the Company has recorded an impairment loss with respect
to intangible assets amounting to Rs. 3,167 million (Euros 47 million), before
tax and with respect to goodwill of Rs 10,856 million (Euros 162 million). This
is a one-time non-cash charge in the Income statement and incorporates the
provisions of applicable accounting standards.
* As a result of the impairment, the reported Net Loss for FY09 is at Rs. 5.2
billion ($102 million).
* PAT adjusted for one time exceptions, at Rs. 8.5 billion ($167 million) as
against Rs. 4.5 billion ($88 million) in FY08. This translates to an adjusted
EPS of Rs. 50.3 ($1.0) in FY09 representing a growth of 89% over FY08.
* Revenues from Global Generics business at Rs. 49.8 billion ($979 million)in
FY09 as against Rs. 33.0 billion ($649 million) in FY08. YoY growth of 51%
driven by sumatriptan and the key markets of North America and Russia.
* Revenues from Pharmaceutical Services & Active Ingredients (PSAI) increase by
13% to Rs. 18.8 billion ($369 million) in FY09 as against Rs. 16.6 billion ($327
million) in FY08.
* During the year, the company launched 116 new generic products, filed 110 new
generic product registrations and filed 55 DMFs globally.
* The company has filed 3 INDs in March 2009 and they have also been accepted by
the concerned regulatory agency. The first human subjects were successfully
dosed in a phase I study with DRL 17822, a selective inhibitor of CETP, for the
treatment of dyslipidemia, atheresclerosis and associated cardiovascular
diseases. The other two molecules are for the treatment of COPD and
Dyslipidaemia.
* The Board of Directors of the Company have recommended a final dividend of Rs.
6.25 (125%) per equity share of Rs. 5/- face value, subject to the approval of
shareholders at the ensuing Annual General Meeting.

All figures in millions, except EPS All dollar figures based on convenience translation rate of 1USD = Rs 50.87

Dr. Reddy`s Laboratories Limited and Subsidiaries

Unaudited Condensed Consolidated Income Statement

FY09 FY08
Particulars Index ($) (Rs.) % ($) (Rs.) % Growth %
Revenue A 1,365 69,441 100 983 50,006 100 39
Cost of revenues B 648 32,941 47 484 24,598 49 34
Gross profit C = A-B 718 36,500 53 499 25,408 51 44
Operating Expenses
Selling, general & administrative expenses(a) D 413 21,020 30 331 16,835 34 25
Research and development expenses, net E 79 4,037 6 69 3,533 7 14
Write down of intangible assets F 62 3,167 5 59 3,011 6 5
Write down of goodwill G 213 10,856 16 2 90 0 -
Other (income)/expenses, net H 5 253 0 (8) (402) (1) -
Total Operating Expenses I= D+E+F+G+H 773 39,333 57 453 23,067 46 71
Results from operating activities J = C-I (56) (2,833) (4) 46 2,341 5 -
Finance income (b) K (9) (482) (1) (31) (1,601) (3) (70)
Finance expenses (c) L 33 1,668 2 21 1,080 2 54
Finance expenses, net M = K+L 23 1,186 2 (10) (521) (1) -
Share of profit/(loss) of equity accounted investees N 0 24 0 0 2 0 1100
Profit before income tax O = J-M+N (79) (3,995) (6) 56 2,864 6 -
Income tax expense P (23) (1,173) (2) 19 972 2 -
Profit for the period Q = O+P (102) (5,168) (7) 75 3,836 8 -
Attributable to:
Equity holders of the company R (102) (5,168) (7) 76 3,846 8 -
Minority interest S 0 0 0 (0) (10) (0) -
Profit for the period T = R+S (102) (5,168) (7) 75 3,836 8 -

Weighted average no. of shares o/s U 169 169
Diluted EPS V = R/U (0.6) (30.7) 0.4 22.8
Exchange rate 50.87 50.87

Notes:

(a) Includes amortization charges of Rs. 1,503 million in FY09 and Rs. 1,588 million in FY08

(b) Includes forex gain of Rs. 739 million in FY08

(c) Includes forex loss of Rs. 634 million in FY09.

Key Balance Sheet Items (in millions)
Particulars As on 31st Mar 09 As on 31st Mar 08
($) (Rs.) ($) (Rs.)
Cash and cash equivalents 110 5,603 146 7,421
Investments (current & non current) 10 530 93 4,753
Trade and other receivables 282 14,368 134 6,823
Inventories 260 13,226 219 11,133
Property, plant and equipment 410 20,881 330 16,765
Loans and borrowings (current & non current) 387 19,701 380 19,352
Trade accounts payable 118 5,987 107 5,427
Total Equity 827 42,045 931 47,350

Business Highlights

* Overall revenues at Rs. 69.4 billion ($1.4 billion) in FY09 as against Rs.
50.0 billion ($983 million) in FY08, representing a growth of 39%.

* The growth was majorly driven by the successful launch of the authorized
generic version of GlaxoSmithKline`s Imitrex (generic version: sumatriptan
succinate), in late November 2008.
* Excluding revenues from Sumatriptan, the YoY growth is at 24%, driven by the
key markets of North America and Russia.

* Operating income is at Rs. 11.2 billion ($220 million) in FY09 as against Rs.
5.4 billion ($107 million) in FY08 after adjusting for non cash impairment of
intangibles and goodwill.
* EBITDA at Rs. 14.5 billion ($285 million) in FY09 as against Rs. 9.7 billion
($190 million) in FY08, representing a growth of 50%, higher than the sales
growth of 39%.
* Revenues from Global Generics business at Rs. 49.8 billion ($979 million)in
FY09 as against Rs. 33.0 billion ($649 million) in FY08. YoY growth of 51%
driven by sumatriptan and key markets of North America and Russia.

* Excluding revenues from Sumatriptan, the growth of 58% in North America was
driven by volume growth in existing products, acquisition of the Shreveport
facility and the benefit of rupee depreciation against dollar.
* Revenue growth of 43% in Russia driven by key brands of Omez, Nise, Ketorol,
Cetrine and Bion.

* Revenues from Pharmaceutical Services & Active Ingredients (PSAI) increase by
13% to Rs. 18.8 billion ($369 million) in FY09 as against Rs. 16.6 billion ($327
million) in FY08.
* During the year, the company launched 116 new generic products, filed 110 new
generic product registrations and filed 55 DMFs globally.

Segmental Analysis

Global Generics

* Revenues from Global Generics business at Rs. 49.8 billion ($979 million) in
FY09 as against Rs. 33.0 billion ($649 million) in FY08. YoY growth of 51%
driven by launch of sumatriptan and the key markets of North America and Russia.

* Revenues from North America at Rs. 19.8 billion ($390 million) in FY09 as
against Rs. 8.0 billion ($158 million) in FY08.

* Excluding revenues from Sumatriptan, the growth of 58% in North America was
driven by high volume growth across existing Top products and acquisition of
Shreveport facility.
* Revenue from Shreveport facility at Rs. 1.7 billion ($33 million) in FY09.
* 16 new products launched in FY09.
* During the year, the Company filed 20 ANDAs taking the total filings to 144.
Total of 69 ANDAs pending at the USFDA addressing innovator sales of $46 billion
as per IMS December 2008.

* Revenues from Europe at Rs. 11.9 billion ($234 million) in FY09 as against Rs.
10.2 billion ($201 million) in FY08, representing a growth of 16%.

* Revenues from betapharm increase by 20% to Rs. 9.9 billion ($194 million) in
FY09 from Rs. 8.2 billion ($161 million) in FY08. This increase was on account
of :

* Volume growth in existing products

* betapharm volume growth of 16.5% as against market volume growth of 3.2%.
(Source: NVI Report Apr-March 2009)

* One off seasonal vaccine sales in Q2 FY09

* Revenues from Rest of Europe remain flat at Rs. 1.9 billion ($39 million) in
FY09.
* During the year, the company launched 25 new products and filed 11 dossiers
across Europe.

* Revenues from Russia & Other CIS markets at Rs. 7.6 billion ($150 million) in
FY09 as against Rs. 5.5 billion ($109 million) in FY08, representing a growth of
38%.

* Revenues in Russia increase to Rs. 5.8 billion ($114 million) in FY09 as
against Rs. 4.1 billion ($80 million) in FY08. YoY growth of 43% driven by key
brands of Omez, Nise, Ketorol, Cetrine and Bion.

* Dr. Reddy`s volume growth at 11.2% as against the industry volume degrowth of
0.2%. (Source: Pharmexpert MAT Mar 09)
* Combined revenues from OTC & Hospital segment contribute 27% to total
revenues.

* Revenues in Other CIS markets increase to Rs. 1.8 billion ($36 million) in
FY09 as against Rs. 1.5 billion ($29 million) in FY08. YoY growth of 25%.

* Revenues in India increase to Rs. 8.5 billion ($167 million) in FY09 from Rs.
8.1 billion ($158 million), representing a growth of 5%.

* The sub-industry growth in India is on account of delay in launch of new
products and temporary decline due to change in our supply chain model to a
replenishment based model.
* 36 new products launched during the year.

* New products launched in the last 36 months contribute 14% to total revenues
in FY09.

Pharmaceutical Services and Active Ingredients

* Revenues from this segment increase to Rs. 18.8 billion ($369 million) in FY09
as against Rs. 16.6 billion ($327 million) in FY08; YoY growth of 13% driven by
growth in North America and RoW markets as well as benefit by depreciation of
rupee against the dollar.

* Revenue from the business & facility acquired from Dow Pharma at Rs. 1.0
billion ($20 million) in FY09.
* During the year, 55 DMFs were filed globally, with 21 in US, 19 in Europe, 5
in Canada & 10 in RoW. The cumulative DMF filings till date is 351.

Income Statement Highlights:

* Gross profit increase by 44% to Rs. 36.5 billion ($718 million) in FY09 as
against Rs. 25.4 billion ($499 million) in FY08. Gross profit margins on total
revenues at 53% as against 51% in FY08, largely driven by attractive margins on
sumatriptan.
* Selling, General & Administration (SG&A) expenses increase to Rs. 21.0 billion
($413 million) in FY09 from Rs. 16.8 billion ($331 million) in FY08.

* SG&A expenses as a % to sales is at 30% in FY09 as against 34% in FY08. The
absolute increase is in line with a higher sales growth and coupled with a
higher impact of currency on expenses outside India; however it was offset by
control measures to optimize spending on expenses such as travel, General &
Administration expenses and others.

* Other operating expenses of Rs. 253 million in FY09 includes Rs. 921 million
as damages on account of the German court upholding the validity of the
olanzapine patent.
* R&D investments at 6% of total revenues in FY09 as against 7% in FY08. YoY
growth of 14%.
* Finance costs (net) are at Rs. 1.2 billion in FY09 as against Finance income
(net) at Rs. 521 million in FY08. The increase is mainly on account of:

* Net forex loss of Rs. 634 million in FY09 as against net forex gain of Rs. 739
million in FY08.
* Net interest expense of Rs. 687 million in FY09 as against net interest
expense of Rs. 329 million in FY08.

* PAT adjusted for one time exceptions is at Rs. 8.5 billion ($167 million) as
against Rs. 4.5 billion ($88 million) in FY08. YoY growth of 89%.
* Adjusted EPS of Rs. 50.3 ($1.0) in FY09 as against adjusted EPS of Rs. 26.6
($0.5), representing a growth of 89%.
* Capital expenditure for FY09 is at Rs. 4.4 billion ($87 million).

All figures in millions, except EPS All dollar figures based on convenience translation rate of 1USD = Rs 50.87

Dr. Reddy`s Laboratories Limited and Subsidiaries

Unaudited Condensed Consolidated Income Statement

Q4 FY09 Q4 FY08
Particulars Index ($) (Rs.) % ($) (Rs.) % Growth %
Revenue A 390 19,851 100 261 13,253 100 50
Cost of revenues B 179 9,081 46 122 6,229 47 46
Gross profit C = A-B 212 10,770 54 138 7,024 53 53
Operating Expenses
Selling, general & administrative expenses(a) D 104 5,267 27 93 4,715 36 12
Research and development expenses, net E 22 1,135 6 20 1,023 8 11
Write down of intangible assets F 62 3,167 16 3 128 1 -
Write down of goodwill G 213 10,856 55 2 90 1 -
Other (income)/expenses, net H (4) (186) (1) (3) (150) (1) 24
Total Operating Expenses I= D+E+F+G+H 398 20,239 102 114 5,807 44 249
Results from operating activities J = C-I (186) (9,469) (48) 24 1,217 9 -
Finance income (b) K 0 20 0 (6) (290) (2) -
Finance expenses (c) L 1 62 0 5 252 2 -
Finance expenses, net M = K+L 2 82 0 (1) (38) (0) -
Share of profit/(loss) of equity accounted investees N 0 14 0 (0) (1) (0) -
Profit before income tax O = J-M+N (187) (9,537) (48) 25 1,254 9 -
Income tax expense P (5) (240) (1) (6) (328) (2) (27)
Profit for the period Q = O+P (192) (9,777) (49) 18 926 7 -
Attributable to:
Equity holders of the company R (192) (9,777) (49) 18 926 7 -
Minority interest S - - 0 0 0 0 -
Profit for the period T = R+S (192) (9,777) (49) 18 926 7 -

Weighted average no. of shares o/s U 169.1 168.1
Diluted EPS V = R/U (1.1) (57.8) 0.1 5.5
Exchange rate 50.87 50.87

Notes:

a) Includes amortization charges of Rs. 316 million in Q4 FY09 and Rs. 461 million in Q4 FY08.

b) Includes forex gain of Rs. 93 million in Q4 FY08.

c) Includes forex loss of Rs. 21 million in Q4 FY09.

Business Highlights

* Overall revenues at Rs. 19.8 billion ($390 million) in Q4 FY09 as against Rs.
13.2 billion ($261 million) in Q4 FY08, representing a growth of 50%.

* The growth was majorly driven by the Sumatriptan.
* Excluding revenues from Sumatriptan, the YoY growth is at 23%.

* Operating income at Rs. 4.6 billion ($90 million) in Q4 FY09 as against Rs.
1.4 billion ($28 million) in Q4 FY08 after adjusting for non cash impairment.
* EBITDA at Rs. 5.5 billion ($108 million) in Q4 FY09 as against Rs. 2.6 billion
($51 million) in Q4 FY08, representing a growth of 113%.
* Revenues from Global Generics business at Rs. 14.7 billion ($288 million)in Q4
FY09 as against Rs. 8.7 billion ($172 million) in Q4 FY08. YoY growth of 68%
driven by sumatriptan and key markets of North America and Russia.

* Excluding revenues from Sumatriptan, the growth of 44% in North America was
driven by new product launches like Divalproex, Levetiracetam and acquisition of
the Shreveport facility.
* Revenue growth of 88% in Russia driven by key brands.

* Revenues from Pharmaceutical Services & Active Ingredients (PSAI) increase by
11% to Rs. 4.9 billion ($96 million) in Q4 FY09 as against Rs. 4.4 billion ($86
million) in Q4 FY08.

Income Statement Highlights:

* Gross profit increase by 53% to Rs. 10.8 billion ($212 million) in Q4 FY09 as
against Rs. 7.0 billion ($138 million) in Q4 FY08. Gross profit margins on total
revenues at 54% as against 53% in FY08, driven by attractive margins on
sumatriptan.
* Selling, General & Administration (SG&A) expenses increase to Rs. 5.3 billion
($104 million) (27% of revenues) in Q4 FY09 from Rs. 4.7 billion ($93 million)
in Q4 FY08 (36% of revenues).

* The growth of 12% was well lower than the sales growth of 50%. This reduction
of SG&A as a % to sales is largely due to the close monitoring of costs across
the company.

* R&D expenses at 6% of total revenues in Q4 FY09 as against 8% in Q4 FY08.
* Finance costs (net) are at Rs. 82 million ($2 million) in Q4 FY09 as against
Finance income (net) at Rs. 38 million ($1 million) in Q4 FY08. The increase is
mainly on account of :

* Net forex loss of Rs. 21 million in Q4 FY09 as against net forex gain of Rs.
93 million in Q4 FY08.
* Net interest expense of Rs. 71 million in Q4 FY09 as against Rs. 126 million
in Q4 FY08.

* PAT adjusted for one time exceptions is at Rs. 3.3 billion ($64 million) as
against Rs. 1.1 billion ($22 million) in FY08.

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 IFRS.

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:
Kedar Upadhye, +91-40-66834297
kedaru@drreddys.com
Milan Kalawadia, +1-908-203-4931 (North America)
mkalawadia@drreddys.com
Raghavender R, +91-40-66511529
raghavenderr@drreddys.com
Media:
M Mythili, +91-40-66511620
mythilim@drreddys.com

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