About
Dr Reddy's Laboratories Ltd
Dr Reddy's Laboratories Ltd (DRL) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services &Active Ingredients, Global Generics and Proprietary Products - Dr. Reddy's offers a portfolio of products and services including Active Pharmaceutical Ingredients (APIs), custom pharmaceutical services, generics, biosimilars and differentiated formulations. The company's major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. Reddy's operates in markets across the globe. Its major markets include - USA, India, Russia & CIS countries, and Europe.
Dr Reddy's Laboratories was incorporated in the year 1984 in Hyderabad. The company was established by Dr Anji Reddy with an initial capital outlay of Rs 25 lakh. The company made their beginning with the manufacture of Active Pharmaceutical Ingredients and Intermediates (API) and commenced operations with a single drug in a 60-tonne facility near Hyderabad, India. In the year 1986, the company shares were listed on the Bombay Stock Exchange. Also, they entered international market with exports of Methyldopa.
In the year 1987, the company obtained first USFDA approval for Ibuprofen API. In the year 1988, they acquired Benzex Laboratories Pvt Ltd to expand their Bulk Actives business. In the year 1990, they exported Norfloxacin and Ciprofloxacin to Europe and Far East. In the year 1991, they commenced formulation exports to Russia.
In the year 1993, the company established Dr. Reddy's Research Foundation and initiated drug discovery programme. In the year 1994, they finished dosages facility established to cater to highly regulated markets such as the US. In the year 1995, the company set up joint venture in Russia. In the year 1997, they filled first ANDA with the United States Food and Drug Administration for Ranitidine.
In the year 1999, the company acquired American Remedies Ltd, a pharmaceutical company based in India. In the year 2000, Cheminor Drugs Ltd, a group company merged with the company and thus the company became India's third largest pharma company. In the year 2001, the company launched Fluoxetine capsules. They became the first Indian company to win 180-day exclusivity for a generic drug in the US. Also, they launched their first generic product, Ranitidine, in the US market.
In the year 2002, the company made their first overseas acquisition of BMS Laboratories Limited and Meridian Healthcare in UK. In the year 2003, they launched Ibuprofen, first generic product to be marketed under the 'Dr. Reddy's' label in the US. In the year 2005, they acquired Roche's API Business at its manufacturing site in Mexico.
In the year 2006, the company acquired Betapharm the fourth largest generics company in Germany for a total enterprise value of Rs 480 million. In the year 2007, the company launched Reditux - the world's first biosimilar MAb - for the treatment of Non Hodgkins Lymphoma. Also, they became India's leading and most profitable pharmaceutical company.
During the year 2008-09, the company acquired DowPharma's small molecules business in UK under Chirotech Technology Ltd, BASF Corporation's manufacturing facility at Shreveport in Louisiana, USA under Dr. Reddy's Laboratories Louisiana LLC and Jet Generici SRL, a company engaged in the sale of generic finished dosages in Italy. In addition, Perlecan Pharma Pvt Ltd, Macred India Pvt Ltd and Dr. Reddy's Laboratories ILAC Ticaret also became subsidiary of the company.
During the year 2009-10, Dr. Reddy's Pharma SEZ Ltd was incorporated as a wholly-owned subsidiary of the company for the purpose of formulation manufacturing at Special Economic Zone and Perlecan Pharma Pvt Ltd was amalgamated with the company. Further, the company acquired the balance stake of 30% in Dr. Reddy's (Australia) Pty Ltd. The company filed 12 Abbreviated New Drug Applications (ANDAs) in US including six Para IV filing during the year.
During the year 2010-11, the company acquired GlaxoSmithKline's (GSK) oral penicillin manufacturing facility located in Tennessee, USA. This allows the company to enter theUS penicillin-containing antibacterial market segment through brands such as Augmentin and Amoxil, and serve the needs of customers through manufacturing and other capabilities that did not previously exist within the company. Also, they increased the stake in the South African joint venture company to 100% after acquiring the 40% stake of the partner.
During the year, the company launched Cresp in India, the first biosimilar darbepoetin alfa in the world. In March 2011, they launched Peg-grafeelTM in India in the form of an affordable pegfilgrastim, which is used to stimulate the bone marrow to produce more neutrophils to fight infection in patients undergoing chemotherapy. Peg-grafeelTM
During the year, Idea2Enterprises (India) Pvt Ltd, Dr. Reddy's Laboratories Romania SRL, I-Ven Pharma Capital Ltd, Dr. Reddy's Laboratories Tennessee LLC and Dr. Reddy's Venezuela C.A. became wholly-owned subsidiaries of the company. Further, Dr. Reddy's Laboratories (Proprietary) Ltd also became wholly-owned subsidiary by virtue of purchase of its balance 40% stake by the company. Also, Macred India Pvt Ltd ceased to be a subsidiary of the company.On 27 July 2012, Dr. Reddy's Laboratories announced that the United States Food and Drug Administration (USFDA) had lifted import alert on its chemical manufacturing facility at Cuernavaca, Mexico after inspection of the unit in March 2012. Earlier, Dr. Reddy's Mexico facility was inspected by USFDA in November 2010 and based on observations by the USFDA, a warning letter was issued to the company on 14 June 2011.On 8 October 2012, the Custom Pharmaceutical Services (CPS) business of Dr. Reddy's Laboratories Ltd. announced expansion in the areas of activated mPEG manufacturing and in the development and manufacture of NCE (New Chemical Entities) APIs for use in pre-clinical through to commercial development at its manufacturing facility in Mirfield, UK.On 14 December 2012, Dr. Reddy's Laboratories announced that it had launched the recommended public offer to acquire all the issued and outstanding shares of OctoPlus N.V., a service based specialty pharmaceutical company, at an offer price of EUR 0.52 (cum dividend) per share. Shareholders (including certain members of the Boards) holding in aggregate 63.5% of the issued and outstanding ordinary shares of OctoPlus entered into irrevocable undertakings to tender their shares under the offer. On 28 February 2013, Dr. Reddy's Laboratories announced that it had raised its stake in OctoPlus N.V, to 98.6% following a public offer for all the issued and outstanding ordinary shares in the capital of OctoPlus. OctoPlus is a leading European provider of advanced drug formulation and clinical scale manufacturing services to the pharmaceutical and biotechnology industries, with a focus on difficult-to formulate active pharmaceutical ingredients.On 19 December 2014, Dr. Reddy's Laboratories announced that it had completed the acquisition of Habitrol brand (an over-the-counter nicotine replacement therapy transdermal patch) from Novartis Consumer Health Inc. following issuance of the proposed consent order from the US Federal Trade Commission (FTC) on 26 November 2014. The company had earlier entered into an asset purchase agreement with Novartis Consumer Health Inc. to acquire the title and rights of Habitrol brand and to market the product in the US market.On 22 March 2015, Dr. Reddy's Laboratories (NYSE: RDY) announced that it had settled its claims against Nordion Inc. (formerly MDS Inc.), headquartered in Ottawa, Canada, in a case pending in the United States District Court for the District of New Jersey, for a cash payment of USD 22.5 Million by Nordion to Dr. Reddy's. The case was brought by Dr. Reddy's in April 2009 seeking damages sustained by the company caused by a claimed breach by Nordion of its Laboratory Services Agreement with Dr. Reddy's. Nordion, as a contract research organization, provided laboratory services to Dr. Reddy's, including bio-equivalency studies, to support Dr. Reddy's regulatory applications for approval of generic drugs, including Abbreviated New Drug Applications (ANDAs) filed with the United States Food and Drug Administration (the USFDA) for approval to market generic drugs in the United States. The case arose after the USFDA cited MDS with violations of good laboratory practices which caused the USFDA not to accept, without further substantiation, MDS's laboratory reports performed during the period 2000-2004.
On 23 March 2015, Dr Reddy's Laboratories announced that it has entered into an agreement with Hetero, under which Dr. Reddy's has been licensed to distribute and market Sofosbuvir 400 mg tablets , indicated in the treatment of Chronic Hepatitis C, under the brand name Resof, in India.
On 1 April 2015, Dr. Reddy's Laboratories announced that it has entered into a definitive agreement to acquire a select portfolio of the established products business of UCB, a global biopharmaceutical company, in the territories of India, Nepal, Sri Lanka and Maldives. The revenue of the acquired business stood at approximately Rs 150 crore for calendar year 2014.On 29 May 2015, Dr Reddy's Laboratories Limited and AstraZeneca Pharma India Limited entered into a distribution agreement for saxagliptin and its fixed dose combination with metformin, in Type 2 DiabetesOn 6 August 2015, Dr. Reddy's Laboratories Ltd. announced that it has entered into a strategic collaboration with Amgen, one of the world's leading independent biotechnology companies, to market and distribute three Amgen medicines in India in the areas of oncology and cardiology. On 16 September 2016, Dr. Reddy's announced that it had expanded its strategic collaboration with Amgen to market and distribute three of Amgen's medicines in India in the therapy areas of oncology and osteoporosis.
On 9 September 2015, PanTheryx Inc., a global medical nutrition company based in Boulder, Colorado, and Dr. Reddy's Laboratories Ltd. announced a multi-country supply and licensing agreement whereby Dr. Reddy's Lab got the exclusive right to market and distribute PanTheryx's breakthrough nutritional intervention, DiaResQ, for infectious diarrhea in India and Nepal and in process for Russia, Myanmar, Vietnam, Ukraine, Sri Lanka, Kazakhstan, Belarus, Jamaica, and select LATAM markets. Dr. Reddy's will market the product in India and Nepal under the Reliqua brand.
On 14 September 2015, Dr. Reddy's Laboratories announced the signing of a commercialization deal with Hatchtech, an Australian pharmaceutical company developing an innovative prescription head lice product, Xeglyze Lotion. The exclusive rights for this product are applicable for the territories of the United States, Canada, India, Russia and the CIS, Australia, New Zealand and Venezuela.
On 4 November 2015, Dr. Reddy's Laboratories entered into a strategic alliance with Biocodex, a multinational pharmaceutical company, to market and distribute Biocodex products in the Romanian market.
On 5 November 2015, the US Food and Drug Administration (USFDA) issued a warning letter to Dr. Reddy's Laboratories relating to its API manufacturing facilities at Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as Oncology Formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh. This action follows the earlier inspections of these sites by the agency in November 2014, January 2015 and February 2015 respectively.
On 18 November 2015, Dr. Reddy's Laboratories announced that it had completed the purchase of worldwide exclusive intellectual property rights for Fondaparinux sodium, its generic anti-coagulant drug from its Australian partner, Alchemia Limited. Earlier, the company had signed a term sheet for this transaction in September 2015. Fondaparinux is a generic version of the anticoagulant drug Arixtra.
On 11 March 2016, Dr. Reddy's Laboratories Ltd. and TR-Pharm announced a strategic collaboration agreement for the manufacture and commercialization of a portfolio of Dr. Reddy's Laboratories' biosimilar drugs in Turkey.
On 28 March 2016, Dr. Reddy's Laboratories and XenoPort, Inc. announced that they have entered into a license agreement pursuant to which Dr. Reddy's Laboratories will be granted exclusive US rights for the development and commercialization of XenoPort's clinical stage oral new chemical entity, XP23829. Dr. Reddy's Laboratories plans to develop XP23829 as a potential treatment for moderate-to-severe chronic plaque psoriasis and may potentially develop XP23829 for relapsing forms of multiple sclerosis (MS).
On 31 March 2016, Dr. Reddy's Laboratories announced that it has entered into a licensing agreement with Eisai Co., Ltd, Japan by which Dr. Reddy's will be granted exclusive worldwide development and commercialization rights (excluding Japan and Asia) for Eisai's investigational anticancer agent E7777. Eisai will be responsible for the development and marketing of E7777 in Japan and Asia, while Dr. Reddy's holds the option for rights to develop and market the agent in India.
On 25 May 2016, Dr. Reddy's Laboratories announced the acquisition of an eminent portfolio of over-the-counter (OTC) brands in the US in the cough-and-cold, pain, and dermatology categories from Ducere Pharma.
On 3 August 2016, Dr. Reddy's Laboratories announced that it successfully completed the previously announced acquisition of a portfolio of complex generic products in the US from Teva Pharmaceutical Industries Ltd. and an affiliate of Allergan plc. On 11 June 2016, Dr. Reddy's Laboratories entered into a definitive agreement with Teva Pharmaceutical Industries Ltd. and an affiliate of Allergan plc to acquire a portfolio of eight Abbreviated New Drug Applications (ANDAs) in the US for $350 million in cash.
On 7 October 2016, Dr. Reddy's Laboratories announced its entry into Colombia with its portfolio of high quality and affordable medicines for Cancer patients.
On 26 October 2016, Dr. Reddy's Laboratories announced that it had entered into a strategic collaboration with Gland Pharma, a globally recognized developer and manufacturer of sterile dosage forms, to market and distribute a diverse portfolio of eight injectable Abbreviated New Drug Applications (ANDAs) in the United States.
On 8 February 2017, Dr. Reddy's Laboratories Ltd announced the expansion of its commercial operations in Europe with the introduction of its portfolio of generics in France.
On 3 March 2017, Dr. Reddy's Laboratories announced that it had completed the acquisition of 100% stake in Imperial Credit Private Limited, a Non-Banking Finance Company (NBFC), based out of Kolkata, for a consideration of Rs 2.05 crore. The company proposes to undertake the group's captive financial activities through this entity.
On 27 March 2017, Dr. Reddy's Laboratories and Integra LifeSciences Holdings Corporation, a leading global medical technology company, announced that they have entered into an exclusive distribution agreement. Under the agreement, Dr. Reddy's will market and distribute DuraGen Plus and Suturable DuraGen Dural Regeneration Matrices for use in patients in India. The DuraGen product line offers Duraplasty Solutions meant for the repair of the dura mater. Dura mater is a thick membrane that surrounds the brain and spinal cord, and contains the cerebrospinal fluid (CSF). DuraGen Plus Dural Regeneration Matrix is indicated as a dural substitute for the repair of dura mater.
On 27 July 2017, Dr Reddy's Laboratories Ltd. and CHD Bioscience Inc., a privately-held biopharmaceutical company, announced a global licensing agreement for the clinical development and commercialization of Dr. Reddy's phase III clinical trial candidate, DFA-02. It is intended to be used for the prevention of surgical site infections, following non-emergency, elective colorectal surgery. Under the terms of the agreement, Dr. Reddy's would receive equity in CHD valued at $30 million upon an IPO of CHD or a minimum of $30 million in cash within 18 months of execution of the agreement. Dr. Reddy's will also receive additional milestone payments of $40 million upon USFDA approval. In addition, CHD will pay Dr. Reddy's double-digit royalties on sales and commercial milestones.
On 22 August 2017, Dr. Reddy's Laboratories Ltd. through its wholly owned subsidiary Promius Pharma, LLC, announced that it has out-licensed the future development, manufacturing, and commercialization rights of DFD-06, a topical high potency steroid, to Encore Dermatology Inc. The drug is intended to be used for treatment of moderate to severe plaque psoriasis. Under the terms of the agreement, Encore will be responsible for the commercialization of DFD-06 in the United States. Promius Pharma is eligible to receive certain pre- and post- commercialization milestone payments of up to USD $32.5 million, followed by fixed royalty payments on net sales.
On 19 December 2017, Dr. Reddy's Laboratories Ltd. announced that its US subsidiary had reached a settlement with the US Government in a case involving packaging for five blister-packed prescription products. In a joint filing by the parties, Dr. Reddy's and the US Department of Justice agreed to the settlement of the action without any adjudication of any issue of fact or law.
In FY2018, the company filed 19 new Abbreviated New Drug Applications (ANDAs) and one New Drug Application (NDA) with the USFDA.
As of 31 March 2018, the company had 110 generic filings pending approval from the USFDA, comprising 107 ANDAs and three NDAs filed under the 505(b)(2) route of the US Federal Food, Drug and Cosmetic Act. Of the 107 ANDAs, 63 are Para IV applications.
The company had 51 subsidiaries and two joint venture companies as on 31 March 2018. During FY2018, Dr. Reddy's Laboratories Chile SpA. (in Chile), Dr. Reddy's (WUXI) Pharmaceutical Co. Limited (in China), Dr. Reddy's Laboratories Malaysia Sdn. Bhd. (in Malaysia) and Dr. Reddy's Laboratories Taiwan Limited (in Taiwan) have become subsidiary companies. DRSS Solar Power Private Limited was closed and ceased to be a joint venture company.
In FY2019, the company filed 20 new Abbreviated New Drug Applications (ANDAs) with the USFDA. As on 31 March 2019, the company had 110 generic filings pending approval from the USFDA - comprising 107 ANDAs and three New Drug Applications (NDAs).
The company had 52 subsidiaries and two joint venture companies as on 31 March 2019. During FY2019, Dr. Reddy's Laboratories (Thailand) Limited and Dr. Reddy's Laboratories Philippines Inc. have become subsidiary companies. Pursuant to sale of all the issued and outstanding membership interests in the antibiotic manufacturing facility at Tennessee, USA, Dr. Reddy's Laboratories Tennessee, LLC ceased to be a subsidiary.
During FY2019, the company launched 15 new brands in India. The company spent towards R&D expenses during FY2019 for the amount of Rs 15,607 million, or 10.1% of revenue, versus 12.9% in FY2018.
In FY2020, the company filed eight new Abbreviated New Drug Applications (ANDAs) with the US Food and Drug Administration (USFDA). As on 31 March 2020, the company had 99 generic filings pending approval from the USFDA, consisting of 97 ANDAs and two New Drug Applications (NDAs).
The company had 50 subsidiaries and two joint venture companies as on 31 March 2020. During FY2020, Aurigene Pharmaceutical Services Limited was incorporated as a step-down subsidiary company. Dr. Reddy's Singapore Pte. Limited and Reddy Antilles N.V. were closed and ceased to be wholly-owned subsidiaries. Dr. Reddy's Laboratories International SA ceased to be a step-down subsidiary of the company consequent to its merger with Dr. Reddy's Laboratories SA.
During FY2020, the company launched 21 new brands in India. The company also entered the nutrition segment with the launch of our diabetes nutrition drink Celevida'. The company spent towards R&D expenses during FY2020 amounting to Rs 15,410 million, or 8.8% of revenue, versus 10.1% in FY2019.
On 10 June 2020, the company completed the acquisition of select divisions of Wockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dennatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the company completed the purchase price allocation. The fair value of consideration transferred is Rs 16,115 million. The company recognised Rs 373 million, Rs 14,888 million and Rs 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company's Global Generics segment.
On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The Company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based on the forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future.
The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments.
During December 2020, the company entered into a definitive agreement with Glenmark Phannaceuticals Ltd. to acquire, certain brands in various Emerging Market countries for a total consideration of Rs 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles.
Dr Reddy's Laboratories Ltd
Chairman Speech
Dear Member,
There has never been a year such as this.
We pray that there never will be any more in our lifetime as well as of our children
and grandchildren.
As on May 14, 2021, the virus has infected over 160 million and has claimed the lives
of 3.4 million people worldwide. India, the second worst infected country in the world,
has witnessed over 25 million cases and more than 270,000 deaths.
Your company's core dictum is ‘Good Health Can't Wait'.
Never before in the history of Dr. Reddy's has this maxim been more important than now.
In the context of this horrific pandemic, let us briefly share with you what your company
has done to address the situation.
With the pandemic flaring for the first time in April 2020, the primary objective was
to ensure health and safety of our employees and their families while continuing to supply
medicines across the world. Some of the interventions that we quickly put in place were:
• A well-being and support plan that comprised tele-consulting, helplines, 24x7
access to clinical psychologists through an online platform and a home isolation program.
• Dedicated separate COVID-19 care facilities were launched for employees and
dependents in three locations to provide pre-hospitalization care.
• For employees working on-site, stringent social distancing and safety measures
were deployed in work locations, transport facilities and cafeterias. Other measures
included multiple stages of disinfection, provision of personal protective equipment,
automating actions that require manual contact. Moreover, we provided a daily hardship
allowance.
• We contracted for additional insurance coverage for COVID-19 which covered
hospitalization and home quarantine expenses. This was extended to our employees and their
dependents in India. Employees were also provided additional COVID-19 leave.
At the same time, Dr. Reddy's acted quickly to bring various preventive and curative
medicines to deal with COVID-19, including a vaccine. Let us start with our vaccine
journey.
Sputnik V vaccine
• In September 2020, when the first phase of the pandemic was still raging in
India, Dr. Reddy's signed up with the Russian Direct Investment Fund (RDIF) —
Russia's sovereign wealth fund — to cooperate on clinical trials and distribution of
Sputnik V vaccine in India. Upon regulatory approval in India, RDIF committed to supply
100 million doses of the vaccine to Dr. Reddy's.
• Thereafter, we created a partnership with the Biotechnology Industry Research
Assistance Council (BIRAC) of the Department of Biotechnology, Government of India, for
advisory support and to use some of BIRAC's clinical trial centers for clinical trials of
Sputnik V vaccine.
• From December 2020, we commenced clinical trials of Sputnik V. Based on
satisfactory data from Phase II trials, we received approval from the Drugs Controller
General of India (DCGI) to conduct Phase III clinical trial on 1,500 subjects as part of a
randomized, doubleblind, parallel-group, placebo-controlled study in India.
• Simultaneously, Sputnik V showed strong efficacy, immunogenicity and safety
results in Phase III clinical trials conducted on 19,866 people in Russia by RDIF. The
efficacy of Sputnik V against COVID-19 was reported at 91.6%.
• In February 2021, we initiated the process with DCGI for Emergency Use
Authorization of Sputnik V. This authorization was granted in April 2021.
• On May 1, 2021, the first consignment of imported doses of the Sputnik V vaccine
landed in India. These received regulatory clearance from the Central Drugs Laboratory,
Kasauli, on May 13, 2021. The soft launch of the vaccine commenced and the first dose of
the vaccine was administered in Hyderabad on May 14, 2021.
• Further consignments of imported doses are expected over the coming period.
Subsequently, supply of the Sputnik V vaccine will commence from Indian manufacturing
partners. Your company is working closely with six manufacturing partners in India to
fulfil regulatory requirements to ensure smooth and timely supply.
• Sputnik V makes Dr. Reddy's, the third enterprise in India that has been
authorized to supply COVID-19 vaccines.
• We will work closely with stakeholders in the government and the private sector
in India to ensure the widest possible reach of the Sputnik V vaccine as part of the
national inoculation effort. This is a reaffirmation of our determination to fight against
the COVID-19 pandemic in India.
Sputnik V is not the only commitment of your company regarding COVID-19 treatments. In
addition, we have been involved in three other medicines.
a) Remdesivir: We signed a licensing agreement with Gilead Sciences, Inc. that grants
us the right to register, manufacture and sell Remdesivir, a potential treatment for
COVID-19, in 127 countries including India. We launched Remdesivir under the brand name
"Redyx™" in India in September 2020. With the surge of COVID-19 cases in
the second wave, we ramped-up our capacities to increase availability of the medicine.
b) Avigan (Favipiravir): We entered into a licensing agreement with Fujifilm Toyama
Chemical Co. Ltd. to develop, sell and distribute Avigan (Favipiravir) in all countries
other than Japan, China and Russia. This has enabled us to launch Avigan 200 mg tablets
in India and few other markets. We are also conducting
Phase III trials in North America for outpatient setting with mild to moderate
symptoms.
c) 2-deoxy-D-glucose (2DG™): The 2-DG has been developed by Defence Research and
Development Organization (DRDO) laboratories, in collaboration with Dr. Reddy's. The drug
received emergency use approval as adjunct therapy for hospitalized moderate to severe
COVID-19 patients.
We are also working on Molnupiravir, Baricitinib and other COVID-19 drugs for treatment
ranging from mild to severe conditions.
To retain basic continuity across our annual letters, let us share the consolidated
financial results of your company for FY2021.
• Consolidated revenues were Rs 189.7 billion, or a 9% growth over the previous
year.
• Consolidated gross profit was Rs 103.1 billion, which was 10% greater vis-a-vis
FY2020.
• Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased to Rs 47.4 billion, or an increase of 2% versus the previous year.
• Operating profit increased by 52% to Rs 24.3 billion.
• Profit before taxes (PBT) was Rs 26.4 billion, which was 46% higher than Rs 18
billion earned in the previous year.
• Profit after taxes (PAT) was Rs 17.2 billion, or 12% less than in FY2020.
• Diluted earnings per share (EPS) was Rs 103.65 in FY2021, versus Rs 117.40 in
FY2020.
We wish to take this opportunity of thanking every employee of your company for putting
in all the extra efforts in these trying times to make these results happen. They have
done spectacular work.
Two of our key promises have been addressing unmet patient needs, and helping patients
to manage disease better. Nothing has underscored the importance of these promises as the
COVID-19 pandemic.
We do not know when the second wave will subside. Neither do we know whether there will
be a third wave and of what intensity. But we do know that the only preventive worth the
name is vaccination. And we are committed to seeing that your company plays a key role in
the vaccinating program for our citizens.
Because Good Health Can't Wait.
Many of us have lost loved ones during this pandemic, especially in the second wave.
Our sincerest condolences to them and our prayers that the families have the spirit and
strength to overcome their tragedies.
Stay safe. Vaccinate as soon as you can. Wear masks. Maintain social distancing. This,
too, shall pass. But it needs our combined efforts. And determination to succeed.
With our best regards and prayers,
| G V Prasad |
| Co-Chairman and Managing Director |
Dr Reddy's Laboratories Ltd
Company History
Dr Reddy's Laboratories Ltd (DRL) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services &Active Ingredients, Global Generics and Proprietary Products - Dr. Reddy's offers a portfolio of products and services including Active Pharmaceutical Ingredients (APIs), custom pharmaceutical services, generics, biosimilars and differentiated formulations. The company's major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. Reddy's operates in markets across the globe. Its major markets include - USA, India, Russia & CIS countries, and Europe.
Dr Reddy's Laboratories was incorporated in the year 1984 in Hyderabad. The company was established by Dr Anji Reddy with an initial capital outlay of Rs 25 lakh. The company made their beginning with the manufacture of Active Pharmaceutical Ingredients and Intermediates (API) and commenced operations with a single drug in a 60-tonne facility near Hyderabad, India. In the year 1986, the company shares were listed on the Bombay Stock Exchange. Also, they entered international market with exports of Methyldopa.
In the year 1987, the company obtained first USFDA approval for Ibuprofen API. In the year 1988, they acquired Benzex Laboratories Pvt Ltd to expand their Bulk Actives business. In the year 1990, they exported Norfloxacin and Ciprofloxacin to Europe and Far East. In the year 1991, they commenced formulation exports to Russia.
In the year 1993, the company established Dr. Reddy's Research Foundation and initiated drug discovery programme. In the year 1994, they finished dosages facility established to cater to highly regulated markets such as the US. In the year 1995, the company set up joint venture in Russia. In the year 1997, they filled first ANDA with the United States Food and Drug Administration for Ranitidine.
In the year 1999, the company acquired American Remedies Ltd, a pharmaceutical company based in India. In the year 2000, Cheminor Drugs Ltd, a group company merged with the company and thus the company became India's third largest pharma company. In the year 2001, the company launched Fluoxetine capsules. They became the first Indian company to win 180-day exclusivity for a generic drug in the US. Also, they launched their first generic product, Ranitidine, in the US market.
In the year 2002, the company made their first overseas acquisition of BMS Laboratories Limited and Meridian Healthcare in UK. In the year 2003, they launched Ibuprofen, first generic product to be marketed under the 'Dr. Reddy's' label in the US. In the year 2005, they acquired Roche's API Business at its manufacturing site in Mexico.
In the year 2006, the company acquired Betapharm the fourth largest generics company in Germany for a total enterprise value of Rs 480 million. In the year 2007, the company launched Reditux - the world's first biosimilar MAb - for the treatment of Non Hodgkins Lymphoma. Also, they became India's leading and most profitable pharmaceutical company.
During the year 2008-09, the company acquired DowPharma's small molecules business in UK under Chirotech Technology Ltd, BASF Corporation's manufacturing facility at Shreveport in Louisiana, USA under Dr. Reddy's Laboratories Louisiana LLC and Jet Generici SRL, a company engaged in the sale of generic finished dosages in Italy. In addition, Perlecan Pharma Pvt Ltd, Macred India Pvt Ltd and Dr. Reddy's Laboratories ILAC Ticaret also became subsidiary of the company.
During the year 2009-10, Dr. Reddy's Pharma SEZ Ltd was incorporated as a wholly-owned subsidiary of the company for the purpose of formulation manufacturing at Special Economic Zone and Perlecan Pharma Pvt Ltd was amalgamated with the company. Further, the company acquired the balance stake of 30% in Dr. Reddy's (Australia) Pty Ltd. The company filed 12 Abbreviated New Drug Applications (ANDAs) in US including six Para IV filing during the year.
During the year 2010-11, the company acquired GlaxoSmithKline's (GSK) oral penicillin manufacturing facility located in Tennessee, USA. This allows the company to enter theUS penicillin-containing antibacterial market segment through brands such as Augmentin and Amoxil, and serve the needs of customers through manufacturing and other capabilities that did not previously exist within the company. Also, they increased the stake in the South African joint venture company to 100% after acquiring the 40% stake of the partner.
During the year, the company launched Cresp in India, the first biosimilar darbepoetin alfa in the world. In March 2011, they launched Peg-grafeelTM in India in the form of an affordable pegfilgrastim, which is used to stimulate the bone marrow to produce more neutrophils to fight infection in patients undergoing chemotherapy. Peg-grafeelTM
During the year, Idea2Enterprises (India) Pvt Ltd, Dr. Reddy's Laboratories Romania SRL, I-Ven Pharma Capital Ltd, Dr. Reddy's Laboratories Tennessee LLC and Dr. Reddy's Venezuela C.A. became wholly-owned subsidiaries of the company. Further, Dr. Reddy's Laboratories (Proprietary) Ltd also became wholly-owned subsidiary by virtue of purchase of its balance 40% stake by the company. Also, Macred India Pvt Ltd ceased to be a subsidiary of the company.On 27 July 2012, Dr. Reddy's Laboratories announced that the United States Food and Drug Administration (USFDA) had lifted import alert on its chemical manufacturing facility at Cuernavaca, Mexico after inspection of the unit in March 2012. Earlier, Dr. Reddy's Mexico facility was inspected by USFDA in November 2010 and based on observations by the USFDA, a warning letter was issued to the company on 14 June 2011.On 8 October 2012, the Custom Pharmaceutical Services (CPS) business of Dr. Reddy's Laboratories Ltd. announced expansion in the areas of activated mPEG manufacturing and in the development and manufacture of NCE (New Chemical Entities) APIs for use in pre-clinical through to commercial development at its manufacturing facility in Mirfield, UK.On 14 December 2012, Dr. Reddy's Laboratories announced that it had launched the recommended public offer to acquire all the issued and outstanding shares of OctoPlus N.V., a service based specialty pharmaceutical company, at an offer price of EUR 0.52 (cum dividend) per share. Shareholders (including certain members of the Boards) holding in aggregate 63.5% of the issued and outstanding ordinary shares of OctoPlus entered into irrevocable undertakings to tender their shares under the offer. On 28 February 2013, Dr. Reddy's Laboratories announced that it had raised its stake in OctoPlus N.V, to 98.6% following a public offer for all the issued and outstanding ordinary shares in the capital of OctoPlus. OctoPlus is a leading European provider of advanced drug formulation and clinical scale manufacturing services to the pharmaceutical and biotechnology industries, with a focus on difficult-to formulate active pharmaceutical ingredients.On 19 December 2014, Dr. Reddy's Laboratories announced that it had completed the acquisition of Habitrol brand (an over-the-counter nicotine replacement therapy transdermal patch) from Novartis Consumer Health Inc. following issuance of the proposed consent order from the US Federal Trade Commission (FTC) on 26 November 2014. The company had earlier entered into an asset purchase agreement with Novartis Consumer Health Inc. to acquire the title and rights of Habitrol brand and to market the product in the US market.On 22 March 2015, Dr. Reddy's Laboratories (NYSE: RDY) announced that it had settled its claims against Nordion Inc. (formerly MDS Inc.), headquartered in Ottawa, Canada, in a case pending in the United States District Court for the District of New Jersey, for a cash payment of USD 22.5 Million by Nordion to Dr. Reddy's. The case was brought by Dr. Reddy's in April 2009 seeking damages sustained by the company caused by a claimed breach by Nordion of its Laboratory Services Agreement with Dr. Reddy's. Nordion, as a contract research organization, provided laboratory services to Dr. Reddy's, including bio-equivalency studies, to support Dr. Reddy's regulatory applications for approval of generic drugs, including Abbreviated New Drug Applications (ANDAs) filed with the United States Food and Drug Administration (the USFDA) for approval to market generic drugs in the United States. The case arose after the USFDA cited MDS with violations of good laboratory practices which caused the USFDA not to accept, without further substantiation, MDS's laboratory reports performed during the period 2000-2004.
On 23 March 2015, Dr Reddy's Laboratories announced that it has entered into an agreement with Hetero, under which Dr. Reddy's has been licensed to distribute and market Sofosbuvir 400 mg tablets , indicated in the treatment of Chronic Hepatitis C, under the brand name Resof, in India.
On 1 April 2015, Dr. Reddy's Laboratories announced that it has entered into a definitive agreement to acquire a select portfolio of the established products business of UCB, a global biopharmaceutical company, in the territories of India, Nepal, Sri Lanka and Maldives. The revenue of the acquired business stood at approximately Rs 150 crore for calendar year 2014.On 29 May 2015, Dr Reddy's Laboratories Limited and AstraZeneca Pharma India Limited entered into a distribution agreement for saxagliptin and its fixed dose combination with metformin, in Type 2 DiabetesOn 6 August 2015, Dr. Reddy's Laboratories Ltd. announced that it has entered into a strategic collaboration with Amgen, one of the world's leading independent biotechnology companies, to market and distribute three Amgen medicines in India in the areas of oncology and cardiology. On 16 September 2016, Dr. Reddy's announced that it had expanded its strategic collaboration with Amgen to market and distribute three of Amgen's medicines in India in the therapy areas of oncology and osteoporosis.
On 9 September 2015, PanTheryx Inc., a global medical nutrition company based in Boulder, Colorado, and Dr. Reddy's Laboratories Ltd. announced a multi-country supply and licensing agreement whereby Dr. Reddy's Lab got the exclusive right to market and distribute PanTheryx's breakthrough nutritional intervention, DiaResQ, for infectious diarrhea in India and Nepal and in process for Russia, Myanmar, Vietnam, Ukraine, Sri Lanka, Kazakhstan, Belarus, Jamaica, and select LATAM markets. Dr. Reddy's will market the product in India and Nepal under the Reliqua brand.
On 14 September 2015, Dr. Reddy's Laboratories announced the signing of a commercialization deal with Hatchtech, an Australian pharmaceutical company developing an innovative prescription head lice product, Xeglyze Lotion. The exclusive rights for this product are applicable for the territories of the United States, Canada, India, Russia and the CIS, Australia, New Zealand and Venezuela.
On 4 November 2015, Dr. Reddy's Laboratories entered into a strategic alliance with Biocodex, a multinational pharmaceutical company, to market and distribute Biocodex products in the Romanian market.
On 5 November 2015, the US Food and Drug Administration (USFDA) issued a warning letter to Dr. Reddy's Laboratories relating to its API manufacturing facilities at Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as Oncology Formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh. This action follows the earlier inspections of these sites by the agency in November 2014, January 2015 and February 2015 respectively.
On 18 November 2015, Dr. Reddy's Laboratories announced that it had completed the purchase of worldwide exclusive intellectual property rights for Fondaparinux sodium, its generic anti-coagulant drug from its Australian partner, Alchemia Limited. Earlier, the company had signed a term sheet for this transaction in September 2015. Fondaparinux is a generic version of the anticoagulant drug Arixtra.
On 11 March 2016, Dr. Reddy's Laboratories Ltd. and TR-Pharm announced a strategic collaboration agreement for the manufacture and commercialization of a portfolio of Dr. Reddy's Laboratories' biosimilar drugs in Turkey.
On 28 March 2016, Dr. Reddy's Laboratories and XenoPort, Inc. announced that they have entered into a license agreement pursuant to which Dr. Reddy's Laboratories will be granted exclusive US rights for the development and commercialization of XenoPort's clinical stage oral new chemical entity, XP23829. Dr. Reddy's Laboratories plans to develop XP23829 as a potential treatment for moderate-to-severe chronic plaque psoriasis and may potentially develop XP23829 for relapsing forms of multiple sclerosis (MS).
On 31 March 2016, Dr. Reddy's Laboratories announced that it has entered into a licensing agreement with Eisai Co., Ltd, Japan by which Dr. Reddy's will be granted exclusive worldwide development and commercialization rights (excluding Japan and Asia) for Eisai's investigational anticancer agent E7777. Eisai will be responsible for the development and marketing of E7777 in Japan and Asia, while Dr. Reddy's holds the option for rights to develop and market the agent in India.
On 25 May 2016, Dr. Reddy's Laboratories announced the acquisition of an eminent portfolio of over-the-counter (OTC) brands in the US in the cough-and-cold, pain, and dermatology categories from Ducere Pharma.
On 3 August 2016, Dr. Reddy's Laboratories announced that it successfully completed the previously announced acquisition of a portfolio of complex generic products in the US from Teva Pharmaceutical Industries Ltd. and an affiliate of Allergan plc. On 11 June 2016, Dr. Reddy's Laboratories entered into a definitive agreement with Teva Pharmaceutical Industries Ltd. and an affiliate of Allergan plc to acquire a portfolio of eight Abbreviated New Drug Applications (ANDAs) in the US for $350 million in cash.
On 7 October 2016, Dr. Reddy's Laboratories announced its entry into Colombia with its portfolio of high quality and affordable medicines for Cancer patients.
On 26 October 2016, Dr. Reddy's Laboratories announced that it had entered into a strategic collaboration with Gland Pharma, a globally recognized developer and manufacturer of sterile dosage forms, to market and distribute a diverse portfolio of eight injectable Abbreviated New Drug Applications (ANDAs) in the United States.
On 8 February 2017, Dr. Reddy's Laboratories Ltd announced the expansion of its commercial operations in Europe with the introduction of its portfolio of generics in France.
On 3 March 2017, Dr. Reddy's Laboratories announced that it had completed the acquisition of 100% stake in Imperial Credit Private Limited, a Non-Banking Finance Company (NBFC), based out of Kolkata, for a consideration of Rs 2.05 crore. The company proposes to undertake the group's captive financial activities through this entity.
On 27 March 2017, Dr. Reddy's Laboratories and Integra LifeSciences Holdings Corporation, a leading global medical technology company, announced that they have entered into an exclusive distribution agreement. Under the agreement, Dr. Reddy's will market and distribute DuraGen Plus and Suturable DuraGen Dural Regeneration Matrices for use in patients in India. The DuraGen product line offers Duraplasty Solutions meant for the repair of the dura mater. Dura mater is a thick membrane that surrounds the brain and spinal cord, and contains the cerebrospinal fluid (CSF). DuraGen Plus Dural Regeneration Matrix is indicated as a dural substitute for the repair of dura mater.
On 27 July 2017, Dr Reddy's Laboratories Ltd. and CHD Bioscience Inc., a privately-held biopharmaceutical company, announced a global licensing agreement for the clinical development and commercialization of Dr. Reddy's phase III clinical trial candidate, DFA-02. It is intended to be used for the prevention of surgical site infections, following non-emergency, elective colorectal surgery. Under the terms of the agreement, Dr. Reddy's would receive equity in CHD valued at $30 million upon an IPO of CHD or a minimum of $30 million in cash within 18 months of execution of the agreement. Dr. Reddy's will also receive additional milestone payments of $40 million upon USFDA approval. In addition, CHD will pay Dr. Reddy's double-digit royalties on sales and commercial milestones.
On 22 August 2017, Dr. Reddy's Laboratories Ltd. through its wholly owned subsidiary Promius Pharma, LLC, announced that it has out-licensed the future development, manufacturing, and commercialization rights of DFD-06, a topical high potency steroid, to Encore Dermatology Inc. The drug is intended to be used for treatment of moderate to severe plaque psoriasis. Under the terms of the agreement, Encore will be responsible for the commercialization of DFD-06 in the United States. Promius Pharma is eligible to receive certain pre- and post- commercialization milestone payments of up to USD $32.5 million, followed by fixed royalty payments on net sales.
On 19 December 2017, Dr. Reddy's Laboratories Ltd. announced that its US subsidiary had reached a settlement with the US Government in a case involving packaging for five blister-packed prescription products. In a joint filing by the parties, Dr. Reddy's and the US Department of Justice agreed to the settlement of the action without any adjudication of any issue of fact or law.
In FY2018, the company filed 19 new Abbreviated New Drug Applications (ANDAs) and one New Drug Application (NDA) with the USFDA.
As of 31 March 2018, the company had 110 generic filings pending approval from the USFDA, comprising 107 ANDAs and three NDAs filed under the 505(b)(2) route of the US Federal Food, Drug and Cosmetic Act. Of the 107 ANDAs, 63 are Para IV applications.
The company had 51 subsidiaries and two joint venture companies as on 31 March 2018. During FY2018, Dr. Reddy's Laboratories Chile SpA. (in Chile), Dr. Reddy's (WUXI) Pharmaceutical Co. Limited (in China), Dr. Reddy's Laboratories Malaysia Sdn. Bhd. (in Malaysia) and Dr. Reddy's Laboratories Taiwan Limited (in Taiwan) have become subsidiary companies. DRSS Solar Power Private Limited was closed and ceased to be a joint venture company.
In FY2019, the company filed 20 new Abbreviated New Drug Applications (ANDAs) with the USFDA. As on 31 March 2019, the company had 110 generic filings pending approval from the USFDA - comprising 107 ANDAs and three New Drug Applications (NDAs).
The company had 52 subsidiaries and two joint venture companies as on 31 March 2019. During FY2019, Dr. Reddy's Laboratories (Thailand) Limited and Dr. Reddy's Laboratories Philippines Inc. have become subsidiary companies. Pursuant to sale of all the issued and outstanding membership interests in the antibiotic manufacturing facility at Tennessee, USA, Dr. Reddy's Laboratories Tennessee, LLC ceased to be a subsidiary.
During FY2019, the company launched 15 new brands in India. The company spent towards R&D expenses during FY2019 for the amount of Rs 15,607 million, or 10.1% of revenue, versus 12.9% in FY2018.
In FY2020, the company filed eight new Abbreviated New Drug Applications (ANDAs) with the US Food and Drug Administration (USFDA). As on 31 March 2020, the company had 99 generic filings pending approval from the USFDA, consisting of 97 ANDAs and two New Drug Applications (NDAs).
The company had 50 subsidiaries and two joint venture companies as on 31 March 2020. During FY2020, Aurigene Pharmaceutical Services Limited was incorporated as a step-down subsidiary company. Dr. Reddy's Singapore Pte. Limited and Reddy Antilles N.V. were closed and ceased to be wholly-owned subsidiaries. Dr. Reddy's Laboratories International SA ceased to be a step-down subsidiary of the company consequent to its merger with Dr. Reddy's Laboratories SA.
During FY2020, the company launched 21 new brands in India. The company also entered the nutrition segment with the launch of our diabetes nutrition drink Celevida'. The company spent towards R&D expenses during FY2020 amounting to Rs 15,410 million, or 8.8% of revenue, versus 10.1% in FY2019.
On 10 June 2020, the company completed the acquisition of select divisions of Wockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dennatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the company completed the purchase price allocation. The fair value of consideration transferred is Rs 16,115 million. The company recognised Rs 373 million, Rs 14,888 million and Rs 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company's Global Generics segment.
On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The Company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based on the forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future.
The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments.
During December 2020, the company entered into a definitive agreement with Glenmark Phannaceuticals Ltd. to acquire, certain brands in various Emerging Market countries for a total consideration of Rs 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles.
Dr Reddy's Laboratories Ltd
Directors Reports
Dear Member,
Your directors are pleased to present the 37th annual report for the year ended March
31, 2021.
The financial year 2021 started with COVID-19 related lockdowns in India and several
parts of our major markets. The pandemic which started about 15 months back impacted
almost everyone and your company was no exception. There were challenges around movement
of people and all the business operations were impacted — be it manufacturing,
research and development (R&D), marketing or the supply chain and logistics. Our team
accepted the situation as a challenge and solved the issues one by one to ensure that your
company continues to make medicines and serve its patients across the globe.
We also collaborated with multiple global partners and have been developing a number of
COVID-19 related drugs. We have successfully launched a vaccine. We found new ways of
working by leveraging digitalization and undertaking several precautionary measures to
ensure the health and safety of our employees and business partners. We contributed our
bit to support the needy and front line workers. Our actions during the pandemic have been
driven by our purpose of ‘Good Health Can't Wait' and reflect the dynamism and
empathy which are core to us.
FINANCIAL HIGHLIGHTS AND COMPANY AFFAIRS*
Table 1 gives the consolidated and standalone financial highlights of the company based
on Indian Accounting Standards (Ind AS) for FY2021 (i.e. from April 1, 2020, to March 31,
2021) compared to the previous financial year.
The company's consolidated total income for the year was Rs 193.39 billion, which was
up by 7% over the previous year. This amounted to US$ 2.64 billion. Profit before tax
(PBT) was Rs 28.84 billion, representing an increase of 53% over the previous year. This
translated to US$ 394 million.
The company's standalone total income for the year was Rs 141.50 billion, which was up
by 12% over the previous year. This was US$ 1.93 billion. PBT was Rs 30.56 billion (US$
418 million), which was up by 10% in rupee terms over the previous year.
Revenues from Global Generics were up by 12% and stood at Rs 154.4 billion. There was
growth across North America Generics, Emerging Markets and India, with strong growth in
Europe.
Revenues from North America stood at Rs 70.5 billion, registering a year-on-year growth
of 9%. This was largely on account of revenue contribution from new products launched,
increase in volumes for some of our base products, and favorable foreign exchange
movement, partly offset by high price erosions in some of our products.
During the year, the company filed 20 abbreviated new drug applications (ANDAs) and one
new drug application (NDA) under Section 505(b)(2) in the USA. As of March 31, 2021, there
were 95 generic filings awaiting approval with the US Food and Drug Administration
(USFDA), comprising 92 ANDAs and three NDAs filed under Section 505(b)(2). Of the 92
ANDAs, 47 are Para IV applications, and we believe that 23 of these have ‘First to
File' status.
Revenues from Emerging Markets were Rs 35.1 billion, registering a year-on-year growth
of 7%. Revenues from India stood at Rs 33.4 billion, showing a year-on-year growth of 15%.
Revenues from Europe were RS 15.4 billion, or a year-on-year growth of 32%.
Revenues from Pharmaceutical Services and Active Ingredients (PSAI) stood at f 32
billion, with a year-on-year growth of 24%. During the year, the company filed 149 drug
master files (DMFs) worldwide, including 14 filings in the US.
SCHEME OF AMALGAMATION
During FY2020, the scheme of amalgamation of Dr. Reddy's Holdings Limited with the
company was approved by the board of directors, members and unsecured creditors of the
company.
TABLE 1 | FINANCIAL HIGHLIGHTS
| PARTICULARS |
CONSOLIDATED |
STANDALONE |
|
FY2021 |
FY2020 |
FY2021 |
FY2020 |
| Total income |
193,389 |
181,376 |
141,502 |
125,936 |
| Profit before depreciation, amortization, impairment and tax |
47,411 |
46,694 |
39,062 |
35,650 |
| Depreciation and amortization |
12,288 |
11,631 |
8,350 |
7,892 |
| Impairment of non-current assets |
6,768 |
16,767 |
150 |
- |
| Profit before tax and before share of equity accounted investees |
28,355 |
18,296 |
30,562 |
27,758 |
| Share of profit of equity accounted investees, net of tax |
480 |
561 |
- |
- |
| Profit before tax |
28,835 |
18,857 |
30,562 |
27,758 |
| Tax expense |
9,319 |
(1,403) |
8,698 |
(1,619) |
| Net profit for the year |
19,516 |
20,260 |
21,864 |
29,377 |
| Opening balance of retained earnings |
128,349 |
112,000 |
124,979 |
99,511 |
| Net profit for the year |
19,516 |
20,260 |
21,864 |
29,377 |
| Other comprehensive income/(loss) |
3 |
5 |
3 |
5 |
| Dividend paid during the year |
(4,147) |
(3,314) |
(4,147) |
(3,314) |
| Tax on dividend paid |
- |
(602) |
- |
(600) |
| Transfer to general reserve |
- |
- |
- |
- |
| Transfer to SEZ re-investment reserve, net |
(1,326) |
- |
(1,326) |
- |
| Closing balance of retained earnings |
142,395 |
128,349 |
141,373 |
124,979 |
*The conversion rate is considered as US$ 1 = Rs 73.14.
Note: FY2021 represents fiscal year 2020-21, from April 1, 2020, to March 31, 2021, and
analogously for FY2020 and other such labelled years.
The no-observation letters from the BSE Limited and National Stock Exchange of India
Limited were received on the basis of no comments received from the Securities and
Exchange Board of India (SEBI). The petition for approval of the said scheme was filed
with the Hon'ble National Company Law Tribunal (NCLT), Hyderabad Bench.
During FY2021, hearings on the petition took place and on April 20, 2021, the Hon'ble
NCLT has reserved the order.
DIVIDEND
Your directors are pleased to recommend a dividend of Rs 25 (500%) for FY2021, on every
equity share of Rs 5/-. The recommended dividend is in line with the dividend distribution
policy of the company.
The dividend, if approved at the 37th annual general meeting (AGM) will be paid to
those members whose names appear on the register of members of the company as of end of
the day on July 12, 2021. In terms of the provisions of the Income Tax Act, 1961, such
dividend will be taxable in the hands of the members.
In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (Listing Regulations), the dividend distribution policy,
is available on the company's website on www.drreddys.com/
investors/governance/policies-and- documents/
TRANSFER TO RESERVES
The company has not proposed to transfer any amount to the general reserve.
SHARE CAPITAL
The paid-up share capital of your company increased by Rs 0.65 million to Rs 831.51
million in FY2021 due to allotment of 129,149 equity shares, on exercise of stock options
by eligible employees through the ‘Dr. Reddy's Employees Stock Option Scheme, 2002'
and ‘Dr. Reddy's Employees ADR Stock Option Scheme, 2007'.
On December 9, 2020, the company also listed its ADRs on NSE International Exchange in
GIFT City, Gujarat (NSE IFSC).
PUBLIC DEPOSITS
The company has not accepted any deposits covered under Chapter V of the Companies Act,
2013 ("the Act"). Accordingly, there is no disclosure or reporting required in
respect of details relating to deposits.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
During the year, there was no change in the
nature of business of the company. Further, there was no significant change in the
nature of business carried on by its subsidiaries.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no such changes.
SUBSIDIARIES AND ASSOCIATES
The company had 52 subsidiaries and one joint venture company as on March 31, 2021.
During FY2021, Dr. Reddy's (Beijing) Pharmaceutical Company Limited in China and Dr.
Reddy's Formulations Limited in India were incorporated as a step-down subsidiary company
and a wholly-owned subsidiary, respectively. Pursuant to sale of the membership interests
in DRANU, LLC, it ceased to be a joint venture during the year. Further, the company sold
its Contract Development and Manufacturing Organization (CDMO) division of Custom
Pharmaceutical Services (CPS) business to Aurigene Pharmaceutical Services Limited (APSL),
a wholly-owned subsidiary, on slump sale basis, for a consideration of Rs 5,434.5 million.
Section 129(3) of the Act, states that where the company has one or more subsidiaries
or associate companies, it shall, in addition to its financial statements, prepare a
consolidated financial statements of the company and of all subsidiaries and associate
companies in the same form and manner as that of its own and also attach along with its
financial statements, a separate statement containing the salient features of the
financial statements of its subsidiaries and associates.
Hence, the consolidated financial statements of the company and all its subsidiaries
and associates, prepared in accordance with Ind AS 110 and 111 as specified in the
Companies (Indian Accounting Standards) Rules, 2015, form part of the annual report.
Moreover, a statement containing the salient features of the financial statements of the
company's subsidiaries and joint ventures in the prescribed Form AOC-1, is attached as
Annexure I to the board's report. This statement also provides details of the performance
and financial position of each subsidiary and joint venture.
In accordance with Section 136 of the Act, the audited financial statements and related
information of the company and its subsidiaries, wherever applicable, are available on the
company's website: www.drreddys.com.
These are also available for inspection during regular business hours at our registered
office in Hyderabad, India and/or in electronic mode.
Any member desirous of inspecting such documents are requested to write to the company
by sending an email to shares@drreddys.com.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The company makes investments or extends loans/guarantees to its wholly-owned
subsidiaries for their business purposes. Details of loans, guarantees and investments
covered under Section 186 of the Act, along with the purpose for which such loan or
guarantee was proposed to be utilized by the recipient, form part of the notes to the
financial statements provided in this annual report.
CORPORATE GOVERNANCE AND ADDITIONAL SHAREHOLDERS' INFORMATION
A detailed report on the corporate governance systems and practices of the company is
given in a separate chapter of this annual report. Similarly, other information for
shareholders is provided in the chapter on Additional Shareholders' Information. A
certificate from the statutory auditors of the company confirming compliance with the
conditions of corporate governance is attached to the chapter on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on the Management Discussion and Analysis in terms of Regulation 34
of SEBI's Listing Regulations is provided as a separate chapter in the annual report.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
During FY2021, members of the company approved the reappointment of Mr. G V Prasad as a
whole-time director designated as co-chairman and managing director of the company for a
further period of five years with effect from January 30, 2021. The members also approved
the continuation of Mr. Prasad R Menon as an independent director, pursuant to regulation
17(1A) of the Listing Regulations, who attained the age of seventy five years.
Mr. G V Prasad retires by rotation at the forthcoming 37th AGM and being eligible,
seeks reappointment.
Mr. Bharat N Doshi completed his term as an independent director on May 10, 2021, and
does not seek reappointment. The board places on record its appreciation for his
contributions as director of the company.
Mr. Saumen Chakraborty retired as chief financial officer of the company with effect
from December 1, 2020. The board of directors, at its meeting held on October 28, 2020,
appointed Mr. Parag Agarwal as chief financial officer of the company with effect from
December 1, 2020. The board records its appreciation for the excellent work done by Mr.
Chakraborty across various departments of the company, including finance, during his long
stint at Dr. Reddy's.
In accordance with Section 149(7) of the Act, each independent director has confirmed
to the company that he or she meets the criteria of independence laid down in Section
149(6) of the Act, and is in compliance with Rule 6(3) of the Companies (Appointment and
Qualifications of Directors) Rules, 2014 and Regulation 16(1)(b) of the Listing
Regulations. Further, they have affirmed compliance to the code of conduct for independent
directors as prescribed in Schedule IV of the Act.
For reference of the members, a brief profile of Mr. G V Prasad is given in the chapter
on Corporate Governance and in the Notice convening the 37th AGM.
BOARD EVALUATION
As per provisions of the Act, and Regulation 17(10) of the Listing Regulations, an
evaluation of the performance of the board, its committees and members was undertaken. For
details, please refer to the chapter on Corporate Governance.
APPOINTMENT OF DIRECTORS AND REMUNERATION POLICY
Assessment and appointment of members to the board are based on a combination of
criterion that includes ethics, personal and professional stature, domain expertise,
gender diversity and specific qualifications required for the position. A potential board
member is also assessed on the basis of independence criteria defined in Section 149(6) of
the Act, and Regulation 16(1)(b) of the Listing Regulations.
In accordance with Section 178(3) of the Act, Regulation 19(4) of the Listing
Regulations and on recommendation of the company's nomination, governance and compensation
committee, the board adopted a remuneration policy for directors, KMP, senior management
and other employees. The policy is attached in the chapter on Corporate Governance.
NUMBER OF BOARD MEETINGS
The board of directors met five times during the year. In addition, an annual board
retreat was held to discuss strategic matters.
Details of board meetings and the board retreat are given in the chapter on Corporate
Governance.
AUDIT COMMITTEE
As on March 31, 2021, the audit committee of the board of directors consisted entirely
of independent directors: Mr. Sridar Iyengar (chairman), Ms. Kalpana Morparia,
Mr. Bharat N Doshi and Ms. Shikha Sharma. Mr. Bharat N Doshi ceased to be a member of
the committee on completing his term as a director on May 10, 2021. Further details are
given in the chapter on Corporate Governance. The board has accepted all recommendations
made by the audit committee during the year.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Act, your directors state that:
1. applicable accounting standards have been followed in the preparation of the annual
accounts;
2. accounting policies have been selected and applied consistently. Judgments and
estimates made are reasonable and prudent, so as to give a true and fair view of the state
of affairs of the company at the end of the FY2021 and of the profit of the company for
that period;
3. proper and sufficient care has been taken to maintain adequate accounting records in
accordance with the provisions of the Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
4. annual accounts have been prepared on a going concern basis;
5. adequate internal financial controls for the company to follow have been laid down
and these are operating effectively; and
6. proper and adequate systems have been devised to ensure compliance with the
provisions of all applicable laws and these systems are operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL SYSTEMS
The company has in place adequate internal financial controls with reference to its
financial statements. These controls ensure the accuracy and completeness of the
accounting records and the preparation of reliable financial statements.
ENTERPRISE RISK MANAGEMENT
The company has a risk management committee of the board, consisting entirely of
independent directors, and chaired by Ms. Shikha Sharma. Details of the committee and its
terms of reference are set out in the chapter on Corporate Governance.
The audit and risk management committees review key risk elements of the company's
business, finance, operations and compliance, and their respective mitigation strategies.
The risk management committee reviews strategic, business, compliance and operational
risks, while issues around ethics and fraud, internal control over financial reporting
(ICOFR), as well as process risks and their mitigation, are reviewed by the audit
committee.
The company's finance, investment and risk management council (FIRM council) and the
compliance council are management level committees which operate under a charter and focus
on risks associated with the company's business and compliance matters. The FIRM council
and the compliance council periodically review matters pertaining to risk management and
compliance and ethics respectively. Additionally, the enterprise wide risk management
(ERM) function helps management and the board to prioritize, review and measure business
risks against a pre-determined risk appetite, and their suitable response, depending on
whether such risks are internal, strategic or external.
During FY2021, focus areas of risk management committee included review of cyber
security, ethics and compliance program across the company and monitoring environmental
and climate change related risks and other operating risk exposures.
RELATED PARTY TRANSACTIONS
In accordance with Section 134(3)(h) of the Act, and Rule 8(2) of the Companies
(Accounts) Rules, 2014, the particulars of the contracts or arrangements with related
parties referred to in Section 188(1) of the Act, in Form AOC-2 is attached as Annexure II
to the board's report. All contracts and arrangements with related parties were at arm's
length and in the ordinary course of business of the company. Details of related party
disclosures form part of the notes to the financial statements provided in the annual
report.
VIGIL MECHANISM/WHISTLE-
BLOWER/OMBUDSPERSON
POLICY
The company has an ombudsperson policy (whistle-blower/vigil mechanism) to report
concerns. Reporting channels under the vigil mechanism include an independent hotline, a
web based reporting site (drreddys.ethicspoint.com) and a dedicated e-mail to chief
compliance officer. The ombudsperson policy also safeguards against retaliation of those
who use this mechanism. The audit committee chairperson is the chief ombudsperson.
The policy also provides for raising concerns directly to the chief ombudsperson.
Details of the policy are available on the company's website: www.drreddys.com/investors/
governance/ombudsperson-policy.
STATUTORY AUDITORS
M/s. S.R. Batliboi & Associates LLP, chartered accountants (firm registration no.
101049W/E300004) were appointed as statutory auditors of the company at the 32nd AGM held
on July 27, 2016, for a period of five years till the conclusion of the 37th AGM.
Consequently, M/s. S.R. Batliboi & Associates LLP, chartered accountants, complete
their first term of five consecutive years as the statutory auditors of the company at the
conclusion of 37th AGM of the company.
Pursuant to section 139(2) of the Act, the company can appoint an auditors firm for a
second term of five consecutive years.
M/s. S.R. Batliboi & Associates LLP, have consented to the said reappointment, and
confirmed that their reappointment, if made, would be within the limits specified under
Section 141(3)(g) of the Act. They have further confirmed that they are not disqualified
to be reappointed as statutory auditor in terms of the provisions of the Act, and the
provisions of the Companies (Audit and Auditors) Rules, 2014, as amended from time to
time.
The audit committee and the board of directors recommend the reappointment of M/s. S.R.
Batliboi & Associates LLP, chartered accountants, as statutory auditors of the company
from the conclusion of the 37th AGM till the conclusion of 42nd AGM, to the members.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Act, and the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, M/s. Makarand M. Joshi & Co., practicing company
secretaries (certificate of practice no. 3662), Mumbai, India, were appointed as
secretarial auditors of the company for FY2021. The secretarial audit report for FY2021 is
annexed as Annexure III to this report.
Based on the consent received from M/s. Makarand M. Joshi & Co., practicing company
secretaries (certificate of practice no. 3662), Mumbai, India and on the recommendation of
the audit committee, the board has approved their appointment as the secretarial auditor
of the company for FY2022.
COST AUDITORS
Pursuant to Section 148(1) of the Act, read with the relevant Rules made thereunder,
the company maintains the cost records in respect of its 'pharmaceuticals' business.
On the recommendation of the audit committee, the board has appointed M/s. Sagar &
Associates, cost accountants (firm registration no. 000118) as cost auditors of the
company for the FY2022 at a remuneration of Rs 700,000/- plus reimbursement of
out-of-pocket expenses at actuals and applicable taxes. The provisions also require that
the remuneration of the cost auditors be ratified by the members. As a matter of record,
relevant cost audit reports for FY2020 were filed with the Central Government on August
28, 2020, within the stipulated timeline. The cost audit report for FY2021 will also be
filed within the timeline.
AUDITORS' QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE
There are no qualifications, reservations or adverse remarks by the statutory auditors
in their report, or by the practicing company secretary in the secretarial audit report.
During the year, there were no instances of frauds reported by auditors under Section
143(12) of the Act.
SECRETARIAL STANDARDS
In terms of Section 118(10) of the Act, the company complies with Secretarial Standards
1 and 2, relating to the ‘Meetings of the Board of Directors' and ‘General
Meetings' respectively as specified by the Institute of Company Secretaries of India and
approved by the Central Government. The company has also voluntarily adopted the
recommendatory Secretarial Standard-3 on ‘Dividend' and Secretarial Standard-4 on
‘Report of the Board of Directors' issued by the Institute of Company Secretaries of
India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURTS/REGULATORS/ TRIBUNALS
Securities class-action lawsuit in the USA
On August 25, 2017, a securities class action lawsuit was filed against the company,
its then chief executive officer (CEO) and its then chief financial officer (CFO) in the
United States District Court for the District of New Jersey. The company's co-chairman,
its chief operating officer (COO) of that time (since retired), and Dr. Reddy's
Laboratories, Inc., USA, were subsequently named as defendants in the case. The operative
complaint alleges that the company made false or misleading statements or omissions in its
public filings, in violation of the US federal securities laws, that the company's share
price dropped and its investors were affected.
On March 21, 2019, the District Court issued its decision (dated March 20, 2019)
granting in part and denying in part the motion to dismiss. Pursuant to that decision, the
Court dismissed the plaintiff's claims on 17 out of the 22 alleged
misstatements/omissions.
On May 15, 2020, Dr. Reddy's Laboratories Limited, Dr. Reddy's Laboratories, Inc., and
certain of the company's current or former directors and officers (collectively, the
"Defendants"), have entered into a Stipulation and Agreement of Settlement (the
"Stipulation") with lead plaintiff i.e. the Public Employees' Retirement System
of Mississippi in the putative securities class action filed against the Defendants in the
United States District Court for the District of New Jersey. As consideration for the
settlement of the class action, the company has agreed to pay US$ 9 million. The
settlement is subject to the approval of the court and may be terminated prior to court's
approval pursuant to the grounds for termination set forth in the Stipulation.
Subject to the terms of the Stipulation, in exchange for the settlement consideration,
the lead plaintiff and members of the settlement class who do not opt-out of this
settlement would release, among other things, the claims that were asserted, or that they
could have asserted, in this class action. In entering into the settlement, the Defendants
do not admit, and explicitly deny, any liability or wrongdoing of any kind. Subject to the
terms of the Stipulation, the settlement resolves the remainder of the litigation.
On December 23, 2020, the court issued a final order and judgment approving the
settlement. Pursuant to the settlement/court order, the escrow was funded on January 4,
2021. The effective date of the settlement occurred on February 1, 2021, upon transfer of
the settlement fund balance into the final escrow account.
As the company is adequately insured with respect to the aforesaid liability, the
settlement did not have any impact on the company's consolidated income statement for the
year ended March 31, 2021.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013 The company has a policy to ensure prevention,
prohibition and redressal of sexual harassment at the workplace. It has an apex committee
and an internal complaints committee which operate under a defined framework for
complaints pertaining to sexual harassment at workplace. Details are available in the
principle 3 of the Business Responsibility Report forming part of this annual report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
As per Section 135 of the Act, the company has a board-level CSR committee consisting
of Mr. Prasad R Menon (chairman), Mr. G V Prasad and Mr. K Satish Reddy. Based on the
recommendation of the CSR committee, the board has adopted a revised CSR policy that
provides guiding principles for selection, implementation and monitoring of CSR activities
and formulation of the annual action plan. During the year, the committee monitored the
spend and implementation and adherence to the CSR policy. Details of the CSR policy and
initiatives taken by the company during the year are available on the company's website:
www.drreddys.com. The report on CSR activities is attached as Annexure IV to the board's
report.
BUSINESS RESPONSIBILITY REPORT
A detailed Business Responsibility Report as required under Regulation 34 of the
Listing Regulations, is given as a separate chapter in this annual report.
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
(IEPF)
Pursuant to the provisions of the Act, read with IEPF Authority (Accounting, Audit,
Transfer and Refund) Rules, 2016, as amended, declared dividends and interest on
debentures which remained unpaid or unclaimed for a period of seven years have been
transferred by the company to the IEPF, which has been established by the Central
Government.
The above Rules also mandate transfer of shares on which dividends are lying unpaid and
unclaimed for a period of seven consecutive years to IEPF. The company has issued
individual notices to the members whose equity shares are liable to be transferred to
IEPF, advising them to claim their dividend on or before August 18, 2021. Details of
transfer of unpaid and unclaimed amounts to IEPF are given in the chapter on Additional
Shareholders Information.
EMPLOYEES STOCK OPTION SCHEMES
During the year, there has been no change in the ‘Dr. Reddy's Employees Stock
Option Scheme, 2002', the ‘Dr. Reddy's Employees ADR Stock Option Scheme, 2007', and
'Dr. Reddy's Employees Stock Option Scheme, 2018' (collectively referred as ‘the
schemes').
The schemes are in compliance with the SEBI (Share Based Employee Benefits)
Regulations, 2014.
Details are available on the company's website: www.drreddys.com/investors/
governance/policies-and-documents/. The details also form part of note 2.24 of the notes
to accounts of the standalone financial statements.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section
197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are attached as Annexure V to the board's report
In terms of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration in excess of limits
set out in said rules forms part of the annual report.
Considering the first proviso to Section 136(1) of the Act, the annual report,
excluding the aforesaid information, is being sent to the members of the company and
others entitled thereto. The said information is available for inspection at the
registered office of the company or through electronic mode during business hours on
working days up to the date of the forthcoming 37th AGM, by members. Any member interested
in obtaining a copy thereof may write to the company secretary in this regard.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 134(3)(m) of the Act, read with Rule 8(3)
of the Companies (Accounts) Rules, 2014 are attached as Annexure VI to the board's report.
ANNUAL RETURN
The annual return of the company as on March 31, 2021, in terms of the provisions of
Section 134(3)(a) of the Act, is available on the company's website:
www.drreddys.com/investors/reports-and- filings/annual-reports/
ACKNOWLEDGMENT
Your directors place on record their sincere appreciation for the significant
contribution made by its employees through their dedication, hard work and commitment, as
also for the trust reposed in the company by the medical fraternity and patients. The
board of directors also acknowledge the support extended by the analysts, bankers,
government agencies, media, customers, business partners, members and investors at large.
It looks forward to your continued support in the company's endeavor to accelerate
access to innovative and affordable medicines, because Good Health Can't Wait.
| For and on behalf of the board of directors |
| K Satish Reddy |
| Chairman |
| Place: Hyderabad |
| Date: May 14, 2021 |