Investor

Presentation

November 2019

Dr. Reddy’s Laboratories Limited

Hyderabad, India
BSE: 500124 | NSE: DRREDDY | NYSE: RDY
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 and other key global markets in which we operate;
The ability to successfully implement our strategy, our research and development efforts, growth & 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 Governments in our key global markets;
• 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 and in our key global markets.
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.
For more detailed information on the risks and uncertainties associated with the Company’s business activities, please see the company’s annual
report filed in Form 20-F with the US SEC for the fiscal year ended March 31, 2019, quarterly financial statements filed in Form 6-K with the US
SEC for the quarters ended December 31, 2019, June 30, 2019 and September 30, 2019, and our other filings with US SEC. 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.

PROPRIETARY
More than ever people across the world need access
to affordable healthcare
Our purpose and promises remain relevant to achieve this need

PURPOSE OUR PROMISES

Bringing expensive medicine within reach

We accelerate access Addressing unmet patient needs

to affordable medicines
because
Helping patients manage disease better
Good Health
Can’t Wait. Enabling and helping our partners ensure our
medicines are available where needed

Working with partners to help them succeed

PROPRIETARY
 We believe that the changes in market dynamics have created
exciting opportunities. We have what it takes to win in the
generics industry

Strong R&D, API, Broad portfolio – Six spaces set Commitment to Stable ownership
complex generics, Differentiated, up for growth operational and strong
biologics, specialty complex, back excellence, safety, management team
(1200+ scientists,
integrated (US, China, Russia, and compliance with dedicated
India, API, Hospitals) employees
350+ PhDs)

Low cost Strong balance Quality Strong brand Customers &

operations sheet identity stakeholders
orientation
(Customers,
Regulators, Vendors,
Partners)
PROPRIETARY
 We have improved our business performance in last
few years…
SALES: 2 year CAGR of 5% EBITDA: 2 year CAGR of 16% INR Cr.

15,385
14,081 14,203 3,419
1,468
1,173 1,424
2,414 2,549
2,128 2,199 2,408

31% 4,420 4,598 5,507 36%

18.1% 17.0% 22.2%

45% 6,360 5,982 5,996 39%

FY17 FY18 FY19 FY17 FY18 FY19

EBITDA % to Sales
NAG India + EM PSAI Others Dr. Reddy's
EBITDA margins improving due to optimization of cost and
We have well diversified revenue streams between generics
growth in emerging markets
and branded generic markets.
PROPRIETARY
…We are controlling our spend and capex while we
remain with a strong balance sheet and are focusing
on improving profitability …
Gross margin holding up despite continuing price Spend optimization initiatives & improved productivity
erosion in the US
INR Cr.
6,592 6,517 6,450
55.6% 54.2%
53.7%
4,637 4,691 4,889

1,955 1,826 1,561

Gross Margin as a % to sales FY17 FY18 FY19

FY17 FY18 FY19 R&D SG&A SG&A + R&D

Moderation seen in capital expenditure Headroom available for borrowing

FY17 FY18 FY19 Mar-17 Mar-18 Mar-19

Capital
1,228 925 696 Net Debt to Equity 0.25 0.24 0.09
Expenditure

PROPRIETARY
We continued on our improvement journey in H1 FY 20
Revenues EBIDTA Free Cash Flow

INR 8,644 Cr INR 2,568 Cr INR 1,724 Cr

(YoY growth: 15%) (% of Sales: 29.7%)

PBT R&D Expenses Net Debt / Equity

INR 1,616 Cr INR 727 Cr 0.01

(YoY growth: 50%) (% of Sales: 8.4%)

*Includes certain one-time payments like Canada settlement, PP brands divestiture and intangibles write-offs

PROPRIETARY
Recent Updates – H1 FY 20
United States India
 Launched 13 products including some complex and First- to- Growth faster than the overall
market Assets like Daptomycin Inj, Carboprost Inj, Vitamin K Inj, market [Dr. Reddy’s growth* of
OTC Guaifenesin Pseudoephedrine and re-launch of Isotretinoin 12.7% vs market growth of
10.5%]
 gCopaxone and gNuvaring: received Complete Response Letter
from USFDA; preparing for response *As per IQVIA MAT September’ 2019

China Proprietary Products


Canada
Dr. Reddy’s emerged as one of Out licenced ZEMBRACE® SYMTOUCH®
the winners for the supply of (Sumatriptan inj) 3 mg and TOSYMRATM
Olanzapine in the centralized Received $ 50 million (Sumatriptan nasal spray) 10 mg, for U.S.
drug procurement program; as settlement towards $ 110.5 million as upfront consideration /
becoming the first Indian Section 8 damages for near term milestones, and future sales
generic company to have Lenalidomide based royalties
prevailed in the new tendering
 Successful completion of Phase 2B
process
studies for PPC-06 (XP – 23829) 8

PROPRIETARY
Our Focus continues to be on:
1 Delivering high growth in emerging markets

2 Enhancing customer service

Launching new products in US and other markets and

3
continue to build a healthy pipeline
Improving efficiency and cost controls,
4
elimination of waste
5 Divesting non strategic assets and brands

6 Improving internal processes

7
Engaging with USFDA to resolve outstanding
concerns and focus on quality

PROPRIETARY
Our Quality Journey
We are committed to excellence in quality and being best in class
U.S. FDA Audit Updates
Sites Previously on Warning Letter
CTO 6: Submitted all compliance responses; Awaiting re-inspection

Update on recently audited sites

FTO 7 Sterile Plant: Received Form 483 with 8 observations, response sent to USFDA

CTO SEZ: Received Form 483 with 4 observations, response sent to USFDA

Sites in receipt of EIR & considered compliant

FTO 3 FTO – PU 1 FTO – PU 2 Shreveport

CTO – 1 CTO – 2 CTO – 3 CTO – 5

Mexico Mirfield CPS – TDC

In addition, our sites have been approved by regulators from ~20 countries

PROPRIETARY
 Six spaces which will drive significant growth
1
● 99 products pending approval in US*
US ● Ramp-up in New launches
Generics
● Providing great customer service
We have a healthy pipeline of First-to-market, complex Products
NUMBER OF PENDING FILINGS* BY DOSAGE FORM
Topical/ Transdermal/
13 products launched in the US
Vaginal, 8 during the H1 FY 20
Inhalation, 1
Softgel, 2
PIPELINE HIGHLIGHTS
OSD, 38
Complex Inj/ 96 pending ANDAs & 3 pending
Sterile, 18 NDAs [505(b)(2)s]
 No incl. 55 para-IV and we believe 31 have first
to file status

Injectable,
13
Complex
Fast-following on potential OTC
OSD, 19 switches
* Filings as of September 30, 2019 PROPRIETARY
 Six spaces which will drive significant growth
2
● We are looking for sustainable high growth in China
● Many of our US products meet the new Chinese requirements
China
● First Indian company to win a National tender in China, bagged the rights to
supply Olanzapine

High CAGR in China What are we going to do in China?

24% ● Select and launch products that meet local requirements
CAGR 129 ● Scale up local manufacturing
100
84 ● Scale up partnerships in identified therapy areas
We have been present in China for ~20 years
● Established credentials with Regulatory agencies
FY17 FY18 FY19 ● Local Manufacturing experience
Revenues1 ($ Mn)
● Familiarity with commercialization in all provinces of China
1 – Includes JV Revenue PROPRIETARY
Six spaces which will drive significant growth
3 4
● Focus on mega brands
Russia India ● Focus on leveraging Dr. Reddy’s brand
● Develop and launch clinically differentiated
products
5 ● Partner of choice for global generics manufacturers
effectively
API ● Global Leadership through cost, service and back
integration

6
Global
● Leverage portfolio to reach high number of patients
Hospitals
incl. ● Build sustainable business and financial model to fund
Biologics biosimilars
PROPRIETARY
Key Strategic Priorities

Focus on execution in the short term…

Focus on Improve Focus on
profitable growth efficiencies and compliance and
and shareholder our cost structure quality
returns
 Growth in all markets and
launch new products

PROPRIETARY
Key Strategic Priorities

…And ensure growth in the long term

Continue to build Strengthen our Build strong

our global positioning with leadership teams
portfolio organic and and enhance our
inorganic moves internal
 Divest non strategic assets  Selective inorganic moves to
processes
complement our capabilities

PROPRIETARY
Thank you

PROPRIETARY