Dr. Reddy's Q3 FY03 Revenue at Rs.4,348 Million --$91 Million; Net Profit at Rs.692 Million -- $14 Million.

Business Editors

HYDERABAD, India--(BUSINESS WIRE)--Jan. 28, 2003

Dr. Reddy's Laboratories Ltd. today announced its unaudited financial results for the quarter ended December 31, 2002.

Notes

1. In line with global disclosure standards, the company

commenced reporting its financials on a consolidated basis

since Q1 FY03.

2. Current quarter financials discussions below are on a

consolidated basis as per the US GAAP.

3. Current quarter consolidated US GAAP financials are not

comparable with earlier standalone Indian GAAP releases of the

company.

4. Brief highlights of the standalone Indian GAAP are provided

for reference.

5. Detailed analysis of the financials is available on the

Company's website at www.drreddys.com.

Unaudited US GAAP Financials for the quarter ended December 31, 2002
(in Rs million)

----------------------------------------------------------------------

Particulars            Q3FY 03    as a%    Q3 FY 02   as a%   Growth %

----------------------------------------------------------------------

Total Revenue           4,348      100%      4,576      100%    (5%)

Cost of revenues        1,979       46%      1,816       40%     9%

Gross profit            2,369       54%      2,760       60%   (14%)

Total operating
 expenses               1,741       40%      1,270       28%    37%

Operating income          628       14%       1490       32%   (58%)

Equity in loss
 of affiliates             20        0%         37        1%   (46%)

Other expenses/
 (income) net            (167)      (4%)       (42)      (1%)  298%

Income before
 income taxes and         775        18%     1,495       33%   (48%)
 minority interest

Income tax benefit/
 (expense)                (83)       (2%)     (182)      (4%)  (55%)

Minority interest          -           -         0         0     -

Net income                692        16%      1313        29   (47%)


----------------------------------------------------------------------

EPS Rs.                  9.05                17.16

----------------------------------------------------------------------

EPS US                 $ 0.19                 0.36

----------------------------------------------------------------------

Key highlights

-- Revenue at Rs.4348 million as against Rs.4576 million in Q3 FY02.

-- Without fluoxetine exclusivity revenues and one-time R&D licence fee in Q3 FY02, the revenues in Q3 FY03 registered a growth of 33%. Q3 FY02 revenues included Rs.1177 million from fluoxetine for which we were granted a one-time 180-day marketing exclusivity.

-- Net Income at Rs.692 million as compared to 1313 million in the corresponding period of last fiscal.

-- Key markets of US, Europe and Russia contribute 48% to total revenues

-- Branded Formulations International registers growth of 31%. Revenues at Rs. 679 million from Rs.519 million in Q3 FY02. The growth was primarily driven by the performance of the Company's products in the CIS markets.

-- Earnings Per Share (EPS) at Rs.9.05 as against Rs.17.16 in Q3 FY02.

Active Pharmaceutical Ingredients

-- Revenues in this segment declined marginally by 4% to Rs.1475

million.

-- Revenues outside India are at Rs.1074 million; contribute 73%

to the segment's revenues as against 70% in the same period of

previous fiscal.

-- Share of regulated markets of the US & Europe increased to 44%

of the total revenues as against 40% in the same period of

previous fiscal.

-- US, the single largest market, contributed 40% of total

revenues as against 32% in the same period of previous fiscal.

Revenues grew by 19% to Rs.589 million. Nizatidine was the

major contributor with revenue of Rs.219 million.

-- The Company filed 5 DMFs during the quarter taking the total

filings to 36.

-- Revenues in India at Rs.401 million, saw a decline of 14%. The

decline was primarily on account of decline in revenues from

sparfloxacin. This decline was partially offset by growth in

revenues from ciprofloxacin and gatifloxacin, which have grown

by 35% and 142% respectively.

Branded Formulations highlights

-- Revenues in this segment increased by 17% from Rs.1470 million

in the same quarter last year to Rs.1718 million this quarter.

Branded Formulations - India

-- Revenues at Rs.1039 million, recorded a growth of 9% over Q3

FY02.

-- Key brands of Omez, Enam, Stamlo Beta and Clamp witnessed

growth rates in excess of 10%, collectively contributing 22%

revenues from India.

-- Products launched during the last 2 years have contributed 16%

to the total revenues in this segment.

Branded Formulations - International

-- Revenues at Rs.679 million, an increase of 31% over Q3 FY02.

The growth was primarily driven by the performance of the

Company's products in the CIS markets.

-- Revenues in Russia grew by 31% to Rs 438 million. Key

contributors included Omez, Enam, Cipro and Nise, which

together contributed 84% to total revenues in this market.

-- Ukraine, Kazakhstan, Belarus and Sri Lanka registered healthy

growth, together contributing 19% to the total revenues in

this segment.

Generics highlights

-- Revenues in this segment are at Rs.998 million as against Rs

1276 million in Q3 FY02.

-- Q3 FY02 revenues included Rs. 1177 million from fluoxetine

one-time marketing exclusivity.

-- US contributed 74% to the total revenues, followed by Europe

with a contribution of 25%.

-- Tizanidine tablets 2 & 4 mg and fluoxetine 40 mg capsules

contributed 83% to the US revenues.

-- Omeprazole capsules launched in UK during the quarter

contributed 43% to the UK revenues.

-- During the quarter, the Company filed 3 ANDAs with Para IV

certification. This takes the total ANDA filings to 30. The

total filings pending approval with the USFDA stand at 19.

Other Businesses:

-- Revenues in the diagnostics, critical care & biotechnology

divisions increased by 34% to Rs.126 million.

-- Revenues in the Custom Chemical Services division at Rs.9

million in Q3 FY02.

Indian GAAP Standalone Highlights:

-- Net Sales have decreased by 4% from Rs.4119 million in Q3 FY02

to Rs.3964 million this quarter.

-- The third quarter of the previous fiscal includes revenues of

Rs.993 million from fluoxetine 40 mg capsules, for which the

Company was granted 180-day marketing exclusivity, and Rs.108

million as one-time R&D licence fee. Excluding the same, Net

Sales have registered a growth of 31%.

-- Total income for the quarter stands at Rs.4158 million as

against Rs.4206 million in the same period of last fiscal.

-- Net Profit for the quarter at Rs.932 million as against

Rs.1615 million in the same period of last fiscal.

-- Net Profit margin stands at 24% of total sales in Q3 FY03.

General information

The following matter was considered and adopted by the Board of Directors of Dr. Reddy's Laboratories today:

-- Unaudited financial results for the quarter ended December 31,

2002 as required under Clause 41 of the listing agreement.

-- The board has approved a further investment of Rs.50.00 Crores

in the equity share capital of Aurigene Discovery Technologies

Ltd., a wholly-owned subsidiary of the Company.

About Dr. Reddy's

Established in 1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven basic research capabilities. The company develops, manufactures and markets a wide range of pharmaceutical products in India and overseas. Dr. Reddy's produces finished dosage forms, active pharmaceutical ingredients, diagnostic kits, critical care and biotechnology products. The basic research programme of Dr. Reddy's focuses on cancer, diabetes, bacterial infections and pain management.

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.