Dr. Reddy's FY07 Revenue at Rs. 65,095 Million (US$ 1.5 Billion); Net Income at Rs. 9,327 Million (US$ 216 Million).

* Year-on-Year revenues more than double; cross $1.5 billion landmark.

* Excluding AG products, revenues cross $1 billion mark.

* Profit after tax of $216 million and Cash flows from operations of $274 million.

* Several new product launches with significant market share gains.

* Improved market ranking in key markets and therapeutic segments.

* Expanded geographical footprint with operations in new countries.

* Continued product pipeline expansion across businesses.

HYDERABAD, India -- Dr. Reddy's Laboratories Ltd. (NYSE: RDY) today announced its unaudited financial results for the year ended March 31, 2007.

Key Revenue Highlights

-- Revenues at Rs 65 billion (USD 1,510 million) as against Rs 24
   billion (USD 563 million) in FY06. YoY growth of 168%.

    -- Revenues from international markets increased by 250% to Rs. 56
       billion (USD 1,297 million)

    -- Revenues from India increased by 11% to Rs. 9 billion. (USD 213
       million)

-- Revenues excluding the contribution from authorized generics and
   acquisitions, increased by 58% to Rs 36 billion (USD 833 million)
   in FY07 from Rs 23 billion (USD 528 million) in FY06.

-- Revenues from authorized generics contributed 24% and acquisitions
   contributed 21% respectively to total revenues in FY07.

-- International revenues account for 86% of total company revenues in
   FY07 compared to 66% in FY06.

-- Revenues in branded formulations - rest of world increase by 24% to
   Rs.12 billion (USD 286 million) in FY07 from Rs.10 billion (USD 231
   million) in FY06 driven by growth across key markets.

    -- Revenues from international markets grew by 34% to Rs. 5.9
       billion (USD 137 million), driven by growth in Russia, Romania,
       Venezuela and CIS region.

    -- Revenues from India grew by 16% to Rs. 6.4 billion (USD 149
       million), driven by growth in key brands.

-- Revenues in the Active Pharmaceuticals Ingredients (APIs) increase
   by 44% to Rs 11.8 billion (USD 276 million) in FY07 from Rs. 8.2
   billion (USD 191 million) in FY06 driven primarily by sales of
   sertraline, rabeprazole and ramipril.

-- Revenues from custom pharmaceuticals services increase to Rs 6.6
   billion (USD 153 million) from Rs 1.3 billion (USD 31 million) in
   FY06. Excluding contribution from acquisitions, revenues grew from
   Rs. 522 million (USD 12 million) to Rs.1,203 million (USD 28
   million), driven by growth in customer base and product portfolio.

-- Revenues in Europe generics (including betapharm) at Rs 9.6 billion
   (USD 223 million) as against Rs 2.4 billion (USD 56 million) in
   FY06.
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Active Pharmaceutical Ingredients (APIs)

-- Revenues at Rs 11.8 billion as against Rs 8.2 billion in FY06. YoY
   growth of 44%

-- Revenues outside India at Rs 9.8 billion as against Rs 5.9 billion
   in FY06. YoY growth of 64%; Growth across key international
   markets.

-- Revenues in Europe increased by 47% to Rs. 2.1 billion in FY07 from
   Rs. 1.4 billion in FY06 primarily led by growth of key products of
   sertraline, finastride, losartan and ramipril.

-- Revenues in India at Rs 2.1 billion as against Rs 2.3 billion in
   FY06. YoY decline of 10% primarily on account of decrease in sales
   of quinolones due to significant decline in prices.

-- Revenues in rest of the world increased to Rs. 5.6 billion in FY07
   from Rs. 2.9 billion in FY06 primarily driven by growth in key
   products of sertraline, rabeprazole and clopidogrel.

-- Revenues in North America at Rs 2.0 billion in FY07 as against Rs
   1.7 billion in FY06. This increase was on account of increase in
   sales of new products as well as key commercialized products such
   as naproxen sodium, naproxen and sertraline.

-- The Company filed 23 US DMFs during the year taking the total
   filings to 104. The company also filed 11 DMFs in Canada, 9 DMFs in
   Europe and 26 DMFs in RoW including 6 in Japan and 5 in Turkey.

Generic Formulations

-- Revenues in this segment at Rs 33.2 billion as against Rs. 4.1
   billion in FY06.

-- North America contributed 71% to the total revenues & Europe
   (including betapharm) contributed 29%.

-- In North America, revenues increased to Rs. 23.6 billion in FY07
   from Rs. 1.6 billion in FY06. Combined revenues of simvastatin and
   finasteride (AG products) were at Rs. 15.8 billion. Fexofenadine,
   launched in April, contributed Rs. 2.4 billion and ondansetron
   launched in Dec 2006 (under 180 day exclusivity) contributed Rs.
   2.9 billion in revenues during the year.

-- In Europe revenues increased to Rs. 9.6 billion in FY07 from Rs.
   2.4 billion in FY06.

    -- Revenues from betapharm (Germany) were at Rs. 8,004 million in
       FY 07 as compared to Rs. 705 million in FY 06, which represents
       28 days of revenue starting 3rd March 2006.

    -- Revenues from UK market decreased to Rs. 1.5 billion in FY 07
       from Rs. 1.7 billion in FY 06. This decrease was on account of
       significant decline in prices of omeprazole and amlodipine
       partially offset by increase in volumes.

    -- Revenues from Spain at Rs. 61 million.

-- During the year, the company had a total of 33 filings (including 9
   partner products), taking the total filings to 104. Total of 69
   ANDAs pending at the USFDA addressing an innovator sales of $ 57
   billion as per IMS December 2006. During the year, the company also
   received 19 approvals including tentative approvals.

Branded Formulations - International

-- Revenues at Rs 12.3 billion, an increase of 24% over FY06. The
   growth was primarily driven by the performance of Russia, Romania,
   Venezuela & CIS markets.

-- Revenues in Russia increase by 35% to 3.5 billion as against Rs 2.6
   billion in FY06. This growth was primarily driven by increase in
   sales from key brands of Omez, Cetrine, Nise and Keterol.

    -- Market ranking improved to 15th position in the retail segment
       from 24th position in the last 12 months (Source: Pharmexpert
       MAT March 2007)

    -- In the retail segment, the company recorded a growth of 36.5%
       as against the market growth of 23.7% (Source: Pharmexpert MAT
       March 2007, retail segment)

-- Revenues in the CIS markets increase by 35% to Rs 1,118 million as
   against Rs 827 million in FY07. This growth was primarily driven by
   increase in sales from Ukraine and Kazakhstan.

-- Revenues in RoW markets increase by 25% to Rs 915 million as
   against Rs 731 million in FY06. The growth was primarily driven by
   increase in sales from Venezuela, Jamaica South Africa, and Myanmar
   partially offset by decrease in Vietnam.

-- Revenues in Central and Eastern Europe grew by 46% to Rs 377
   million as against Rs 259 million in FY06. This growth was driven
   by significant increase in revenues from Romania.

Branded Formulations - India

-- Revenues in India increase by 16% to Rs 6.4 billion in FY07 from
   5.5 billion in FY06.

    -- The Company is ranked the fastest growing company among the Top
       10 companies in terms of prescription growth. (Source: CMARC
       November 2006 to February 2007)

    -- The Company is ranked the 2nd fastest growing company in the
       Top 10 growing ahead of the industry growth rate. (Source: ORG
       IMS MAT March 2007)

-- Growth primarily driven by performance of key brands of Omez, Nise,
   Stamlo and Razo.

    -- Key brands of Omez and Nise recorded a growth rate of 13.4% and
       31.7% respectively as against market growth rate of 3.8% and
       17.4% respectively. (Source: ORG IMS MAT March 2007)

-- New products launched during the year, totaling 21, contributed
   Rs.247 million in revenues in FY07.

    -- Leon (Levofloxacin), is ranked 6th among all the new product
       introductions in the last 12 months (Source: ORG IMS MAT 2007)

    -- New product launches in the last 3 years have contributed 21%
       to total revenues during the year.

Custom Pharmaceutical Services (CPS)

Revenues from CPS increased to Rs 6.6 billion in FY07 from Rs 1.3 billion in FY06.

-- Revenues from the acquisition in Mexico at Rs. 5,397 million in
   FY07 as compared to Rs. 805 million in FY 06, which also includes
   three months revenues from Mexico (starting 31st Dec 2006)

-- Excluding contribution from the acquisition, revenues increased
   from Rs. 522 million in FY 06 to Rs. 1,203 million in FY 07, driven
   by growth in customer base and product portfolio.

Income Statement Highlights

-- Gross profit increased to Rs. 30.9 billion in FY07 from Rs. 11.9
   billion in FY06. Gross profit margins on total revenues at 47% as
   against 49% in FY 06. Revenues from authorized generics contributed
   24% to total revenues and earned gross margin significantly below
   company average gross margin. The decline in Gross Margin % to
   sales on account of the authorized generic products was partially
   offset by high margin revenues in key product launches of
   ondansetron and fexofenadine.

-- R&D investments (net) at 4% of total revenues in FY07 as against 9%
   in FY06. Gross R&D investments increased by 29% to Rs 3.3 billion
   as against Rs 2.6 billion in FY06. During the year, the Company
   recognized Rs 826 million under its R&D partnerships as a benefit
   to the R&D line item as compared to Rs. 405 million recognized in
   FY 06.

-- Selling, General & Administration (SG&A) expenses increased by 75%
   to Rs 14.1 billion. This increase is primarily on account of
   consolidation of the two acquisitions. As % to revenues adjusted
   for authorized generics and ondansetron, SG&A has lowered to 30%
   from 33% in FY06.

-- Other expense (net) was at Rs 662 million in FY07 as against other
   income (net) of Rs 534 million in FY06. This is primarily on
   account of net interest expense of Rs.1,054 million in FY07 as
   against net interest income of Rs. 419 million in FY06. This is
   primarily on account of the full year effect of the long-term
   obtained in March 2006.

-- Write down of intangible amounting to Rs. 1,770 million comprises -

    -- Write down of Rs. 214 million relating to Trigenesis assets,

    -- Write down of Rs. 1,557 million of product related intangibles
       at betapharm. This write down is the result of the healthcare
       reforms and consequent industry reaction leading to significant
       price erosion in the market.

-- Amortization at Rs. 1,571 million as compared to Rs. 420 million in
   FY 06. This includes Rs1,302 million relating to recurring
   amortization of intangibles in betapharm, Spain (acquisition of
   products) and acquisition in Mexico.

-- Net income at Rs 9.3 billion (14% of total revenues) as against Rs
   1.6 billion (7% of total revenues) in FY06. This translates to a
   diluted EPS of Rs 58.56 as against Rs 10.62 in FY06.

-- During FY07, the Company generated cash flow from operations of
   Rs.11.8 billion.

-- During FY07, the Company incurred capital expenditure (net) of Rs
   4,393 million
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Business Highlights

* Revenues at Rs 15.6 billion as against Rs 6.9 billion in Q4 FY06. YoY growth of 125%.

* Excluding revenues from ondansetron and acquisitions, revenues grew by 53% to Rs. 10.5 billion in Q4 FY07.

* Revenues from APIs increase by 86% to Rs. 3.9 billion in Q4FY07 as against Rs 2.1 billion in Q4 FY06 driven by sales of key products of sertraline and rabeprazole.

* Ondansetron launched in the US in Dec 2006 (under 180 day exclusivity) contributed Rs. 2.7 billion in revenues.

* Revenues in Russia increased to Rs. 700 million in Q4 FY07 from Rs. 409 million in Q4 FY06. This increase was driven by performance of key brands of Nise, Omez and Cetrine.

* Revenues in India increased to Rs. 2.1 billion in Q4 FY07 from Rs.1.9 billion in Q4 FY06. The increase was driven by growth in sales of key brands.

* Revenues from CPS increased to Rs. 1.9 billion in Q4 FY07 from Rs 1.0 billion in Q4 FY06. A substantial part of this growth was driven by sales from Mexico.

Income Statement Highlights

* As a share of revenues, the gross profit ratio increased to 63% of revenues in Q4FY07 from 42% in Q4 FY06. This is relatively higher compared to the previous quarters as well. The significant expansion in the margins for the quarter was largely driven by the high margins enjoyed by ondansetron during exclusivity as well as higher margins in the API and CPS businesses during the quarter. Further, in the previous quarters, the Company recorded significant sales from authorized generics products which earned significantly lower margins resulting in lower margins at the company level.

* Selling, General and Administration (SG&A) expenses increase by 50% to Rs 3.4 billion. This compares with the 125% growth in revenues.

* R&D investments increased by 26% to Rs 852 million as against Rs 678 million in Q4 FY06. As a share of revenues, R&D expenditure is at 5% as against 10% in Q4 FY06. During the quarter, the Company recognized Rs 85 million under its R&D partnerships as a benefit to the R&D line item as compared to Rs. 60 million recognized in Q4 FY 06.

* Write down of intangible of Rs. 1,770 million.

* Amortization at Rs. 451 million compared to Rs 162 million in Q4 FY 06. Current quarter includes Rs. 387 million relating to intangibles in betapharm, Spain (acquisition of products) and acquisition in Mexico.

* Net income at Rs 3,252 million as against net loss of Rs 237 million in Q4 FY06.

General information

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

* Audited financial results for the year ended March 31, 2006 as required under Clause 41 of the listing agreement.

* The Board of Directors has recommended a final dividend of Rs. 3.75 per share of face value of Rs. 5 each.

* The Board of Directors has appointed Dr. J. P. Moreau as Additional Director on the Board of the Company.

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.