Dr. Reddy's Revenue At Rs.4,928 Million; Net Profit At Rs.953 Million Revenue Grows by 45% Excluding Fluoxetine Exclusivity.

Business Editors

HYDERABAD, India--(BUSINESS WIRE)--Oct. 24, 2002

Dr. Reddy's Laboratories Ltd. today announced its unaudited financial results for the quarter ended September 30, 2002.

 Unaudited US GAAP Financials for the quarter ended September 30, 2002
 (in Rs million)
----------------------------------------------------------------------
            Particulars        Q2FY 03 as a%  Q2 FY 02  as a% Growth %
----------------------------------------------------------------------

Total Revenue                   4,928  100%   5,122     100%    (4%)
Cost of revenues                2,284   46%   1,817      35%    26%
Gross profit                    2,644   54%   3,305      65%   (20%)
Total operating expenses        1,718   35%   1,078      22%    59%
Operating income                  926   19%   2,227      43%   (58%)
Equity in loss of affiliates       39    1%      51       1%   (24%)
Other expenses/(income) net      (242)  (5%)     (7)     (0%)
Income before income taxes and
minority interest               1,129   23%   2,183      43%   (48%)
Income tax benefit/(expense)     (172)  (3%)    (47)     (1%)  268%
Minority interest                  (4)  (0%)     (8)     (0%)  (55%)
Net income                        953   19%   2,128      42%   (55%)
EBITDA                          1,298   26%   2,377      46%   (45%)
----------------------------------------------------------------------
EPS  Rs.                        12.46         27.85
----------------------------------------------------------------------
EPS US $                         0.26          0.58
----------------------------------------------------------------------

Key highlights

- Total Revenue at Rs.4,928 million, a decrease of 4% due to decrease in sales of Generics. However, the second quarter of the previous fiscal includes revenues of Rs.1,724 million from Fluoxetine for which we were granted a one-time 180-day marketing exclusivity. Excluding Fluoxetine, the total revenues have registered a growth of 45%.

- Net Income at Rs.953 million for this quarter as against Rs.2,128 million in Q2 FY 02. Net Income as a percentage of revenue decreased to 19% from 42% in Q2 FY 02. Excluding Fluoxetine for which we were granted a one-time 180-day marketing exclusivity in Q2FY02, Net Income has grown by 118%

- Earnings before Interest, Depreciation, Tax & Amortization (EBITDA) at Rs.1,298 million compared to Rs 2,377 million in Q2 FY 02. EBITDA margin decreased to 26% from 46 % in Q2 FY 02. Excluding Fluoxetine for which we were granted a one-time 180-day marketing exclusivity in Q2FY02, EBITDA has increased by 89%.

- API sales outside India increased by 55% to Rs.1,244 million this quarter compared to Rs.803 million the previous year.

- Branded Formulations sales increased by 18% from Rs.1,709 million to Rs.2021 million.

- Earnings per share (EPS) at Rs.12.46 as against Rs 27.85 in Q2 FY 02.

Active Pharmaceutical Ingredients

- Sales increased by 35% to Rs.1,739 million from Rs.1,285

in the same period last fiscal.

- Sales outside India increased by 55% to Rs.1,244 million

and contribute 72% to the segment's revenues as against

62% in the same period of previous fiscal.

- Growth led by regulated markets. The US market with a

sales of Rs.692 million and Europe with a sales of Rs.122

million, grew by 110% and 20% respectively. Nizatidine was

a major contributor in the US with revenues of Rs.237

million.

- Revenues in India at Rs.495 million. A marginal growth of

3%. Key contributors include Ciprofloxacin and

Gatifloxacin, which together contributed 50% to the total

revenues.

- The Company filed 2 DMFs during the quarter taking the

total filings to 31.

Branded Formulations highlights

- Revenues in this segment increased by 18% from Rs.1,709

million in the same quarter last year to Rs.2021 million this

quarter.

Branded Formulations - India

- Sales at Rs.1343 million. As per Sept ORG MAT data, the

company grew by 19.9%, almost twice the industry growth

rate of 10.5%.

- Growth was driven by the performance of new brands

launched during the last 15 months, which contribute 16%

to the total revenues coupled with continued growth in

revenues of key brands.

- Dental brands registered revenues of Rs.42 million

contributing 3% of total revenue.

Branded Formulations - International

- Sales at Rs.678 million. A growth of 12%, driven by an

increase in revenue from Russian and CIS markets, which

contributed Rs.77 million & Rs.24 million respectively.

- Revenues from Russia in this segment at Rs.439 million, a

growth of 21%. Top 4 brands contributed 79% of the revenue

in this market.

- Revenue in CIS markets was driven by good performance in

Kazakhstan & Belarus.

Generics highlights

- Revenues at Rs.1,021 million in Q2 FY03 as against

Rs.1,938 million in Q2 FY02.

- Without exclusivity revenues of Fluoxetine 40 mg capsules

in Q2FY02, which were at Rs.1,724 million, the revenues in

this segment have increased by Rs.807 million. A growth of

377%.

- US was the single largest market in this segment,

contributing 85% to the total revenues followed by UK with

a contribution of 14%.

- Tizanidine tablets 2 & 4 mg launched in the US during the

quarter and Fluoxetine capsules 40 mg contribute 33% & 30%

of the total revenue of this segment respectively. New

products launched during the quarter generated revenues of

Rs.491 million.

- During the quarter, the Company filed one Abbreviated New

Drug Application (ANDA) with a Para IV certification. This

takes the total ANDA filings to 27 and total ANDAs pending

at the USFDA to 15.

Indian GAAP Standalone Highlights:

- Net Sales have fallen by 8% to Rs.4,278 million from

Rs.4,665 million compared to the corresponding period last

year due to decrease in sales of generics.

- The second quarter of the previous fiscal includes

revenues of Rs.1,639 million from Fluoxetine 40 mg

capsules for which the Company was granted 180-day

marketing exclusivity. Excluding the same, the net sales

have registered a growth of 41%.

- Growth driven by an increase in the export sales of Bulk

Actives (API) segment and domestic sales of Formulations.

- Total Income for the quarter at Rs.4,445 million.

- Net Profit at Rs.992 million as against Rs.1,434 million

in the same period last year.

- PAT margin at 23% of total sales.

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

September 30, 2002 as required under Clause 41 of the

listing agreement.

The detailed financials and analytical document is available on the Company's website at www.drreddys.com.

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.