FY 2012 has been a good year for your Company The key financial results
- Consolidated revenues increased by 30% to Rs. 96.7 billion in
- Earnings before interest, taxes, depreciation and amortization
(EBITDA)1 rose by 55% to Rs. 25.4 billion.
- Profit after Tax (PAT)2 grew by 45% to Rs. 15.3 billion.
- Diluted Earnings per Share (EPS) increased from Rs. 64.9 in FY2011
to Rs. 83.8 in FY2012.
I am particularly delighted by four developments.
First, your Company succeeded in yet another blockbuster generic launch
in the USA under 180- days marketing exclusivity. Dr. Reddy''s launched
olanzapine 20 mg tablets, the generic version of the brand Zyprexa®.
Olanzapine is used to treat schizophrenia and bipolar disorder. This
product has added around USD 100 million to your Company''s revenues for
Second, the biosimilars business continues along its impressive growth
path. In my letter to you last year, I had discussed the critical
importance of developing biosimilars in the years to come.
I am happy to note that your Company''s global biosimilars business grew
by 45% over last year and recorded sales of USD 26 million. Today, the
biosimilars portfolio of Dr. Reddy''s constitutes (i) filgrastim, (ii)
peg-filgrastim, (iii) rituximab and (iv) darbepoetin alfa, which have
commercial presence in 13 countries among emerging markets. These are
helping to treat patients suffering from cancer — and at prices that
are significantly more affordable than the corresponding innovator
drugs. Soon, I expect to see Dr. Reddy''s biosimilars entering developed
Third, as a scientist-entrepreneur, I am pleased with the steady growth
in your Company''s investments in R&D — which grew by 17% to clock USD
125 million in FY2012, or 6% of sales. Two- thirds were spent towards
generics development which continues to be an area of high potential
and sound returns; the balance was dedicated to biologies and innovator
research. I hope that the target of 7% of sales will continue to be
maintained in the years to come.
Fourth, I must share with you the news of our entry into Japan. As you
might know, Japan is the second largest pharmaceutical market in the
world, with an estimated size of USD 97 billion. It also has low
generics penetration: 23% of Japanese prescription drug sales by volume
are generics, versus 70% in the USA. Through a joint venture, your
Company is working with Fujifilm to develop, manufacture and promote
generics, with a plan to launch the first products in the next three to
Allow me to go down Memory Lane.
I go back 28 years ago, when your Company was established with an
initial capital outlay of Rs. 2.5 million, and our joys were unbound
when we made our first profits manufacturing ibuprofen for the domestic
Fast forward to 11 years ago: April 2001, when Dr. Reddy''s got listed
on the New York Stock Exchange. That year, i.e. FY2002, your Company''s
revenues shot up to Rs. 15,578 million — driven by sales of
fluoxetine 40 mg, which was its first successful 180-days exclusivity
in the US generics market.
We had several other successful generics launches in the US. I remember
FY2007 when, in a single year, we launched four exclusive 180-days
products: simvastatin, finasteride, ondansetron and fexofenadine. In
the process, consolidated revenues of your Company shot up to USD 1.5
And in FY2012, Dr. Reddy''s became the fastest Indian pharmaceutical
company to surpass USD 2 billion in sales — doing so in less than
four years of crossing the USD 1 billion mark.
The financial people in your Company recently did some work on
shareholder value. It went thus.
If an Indian investor purchased 100 shares during the Company''s IPO in
August 1986, plus the 50% rights issue in August 1989, and held on to
these till date, s(he) would be owning 5,400 shares of Dr. Reddy''s,
whose market value on 31 March 2012 would have been Rs. 9.48 million.
The shareholder would have also earned a total of Rs. 0.56 million as
dividends. The numbers are similarly attractive for a long term US ADR
These are attractive returns on investment, both as capital gains and
Given the way your Company is heading, with regular first-to-file
exclusivities coupled with a predictably healthy annual growth in base
revenues and incomes, I am sure that Dr. Reddy''s will continue
delivering superior value to its investors.
Most importantly, your Company will continue to deliver superior value
to millions of patients across the globe — by providing affordable
and innovative medicines for healthier lives.
May the Company''s progress continue. For medicine. And better lives.
Thank you for your constant kindness and support.
With my very best,
DR. K. ANJI REDDY