RDY - Earnings call transcript Q3 2021 | Dr. Reddy's Laboratories Limited

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen good day and welcome to the Dr. Reddy’s Laboratories Limited Q3 FY’21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Agarwal from Dr. Limited. Laboratories Reddy’s over and sir. Thank to you you

Amit Agarwal

be our the on analysis Mr. released CFO; outlet have note Investor of quarter very we or expressed you and playback and the shall this on a morning the the our day and Parag Reddy’s Reddy’s made for good and comprising: consolidated call available during on XXXX. us the Dr. and website is and and call Dr. of all and call Dr. media of will the call financial conference to evening Please discuss earnings statements. December soon. is rebroadcasted thank outlook consent. business Mr. discussions cannot team the performance for material based XX, are be today’s To also or the Erez Earlier A without team. CEO; IFRS transcripts copyrighted press today Relations our that good ended you joining of we This same leadership being attributed our All the Company’s results posted have our the website. in recorded Reddy’s and be Israeli, for the Agarwal,

call. would proceed with in conference the pertains to Before contained I that call like Safe also everyone this to Harbor I the remind today’s release press

hand to Over call Mr. you, the Now, sir. over Agarwal. I Parag to

Parag Agarwal

of growth were during quarter. by performance though, and results of I everyone. profits impairment financial take all healthy. quarter through to charge to you in pleased had keeping We the XXXX. and your am three impacted you of greetings fiscal and quarter for another hope the good terms Amit, margin, revenue you, EBITDA I families and Thank are taken the safe of our yet

you a me Let through bit these in detail. more take

and XXXX. U.S. rate the Consolidated of Growth as of translated a INRXX.XX, the XX, section, a dollars are crores, December rate account on quarter year-on-year at that by the on into this launches new across stood For is $XXX XX% which all basis. of INRX,XXX at product grew million revenues primarily amounts for convenience translation is markets. is

American North Europe. X%. XX%, by business by our Markets X% revenues by India PSAI Emerging XX%, X%, by and by business Europe X% Our Emerging Sequentially, pickup India, volume supported grew and Markets Generics by grew in by

by American business impacted and volumes in However, erosion North PSAI the in lower price business.

the decline has AURXXX, and erosion gross benefits. Discovery During our we primarily of basis. of the decline a Aurigene is points one lower and Consolidated quarter, programs on on basis account been towards business. XX.X%, points XX quarter The price quarter-on-quarter received this for recognized of basis year-on-year milestone of export margin XX

during is we Teva arising have has impairment higher been three quarter, our tracking INRX,XXX related closely that sales charge $XX increase range. is supported before EBITDA freight The as the sales percentage we COVID-XX-related value is XX% the is for that INRXXX is from and accounting SG&A crores, the crores, activities spend PSAI due quarter. margin the of INRX,XXX pertaining was of digital acquired We testing the losses for crores, reflected has Global spend of intangible quarter Effective for that charge. in capability took is and milestone is costs on including the one-time The of of million. percentage carrying crores, our XX.X%, continued to in and $XX are sales. that normal quarter, tax line rate made were market XX.X%, XX.X% the tax by XX% INRXXX it tax certain of the and a assets of taken this products. and and target of analysis a of products our the quarterly is within INRXXX with not product certain primarily million. assets AURXXX been and is X.X our expenses for which deferred for impairment quarter do normal an we this is $XX higher These quarter and In The Topiramate impairment. the respectively, and The $XXX XXXX. of crores, at income to The quarter in an but non-recognition for R&D marketing this branded standards EBITDA and taken compound development of is realities year at that at quarter development million margin building, Generics investments to expenses in is stood as quarter-on-quarter. for and Consequently, Gross $XXX current the However, intangibles aspirational is to out impairment the XX%. and for improvements. and Saxagliptin requirements the XX% an Metformin. XX%, Phentermine and received million. increase of at of due NuvaRing, are and of quarter. part productivity towards profit Ezetimibe in the businesses increase concluded, The markets, year-on-year hence, million, SG&A

capital business crores, to the the receivables which an million. inventory. receivables is increase in XXst increase after The line a Russia INRX.XX. INRXX Reported inventory around crores, with for We and and stood is at a any Glenmark increased INRXXX is the the due INRXXX to by been before trend. that CIS supply the Increase capital towards We EPS in $XX charges. products Increase in million $X December $XX approximately the working which after on crores, flow receivables investment INRXXX ETR deal this discounting outflow normal due markets. crores, Operating is $XX million. for for tax in $X crores quarter net brands be expect of cash invested cash in net certain in partially the INRXX for of is and inventory million the of of a impact which the There was balance acquired was quarter. planned We our free XXXX reduction to with of potential INRXX to XX% for had that Profit was is each is impairment surplus as disruptions. million. approximately payout quarter normal has in crores, from

Foreign million, form INRXX.X of currency dollar. cash to are the for flow hedges range $XXX next hedged for the derivatives months U.S. approximately around a INRXX.X of to in XX the dollars largely

key cash flow Erez. now of this over request you, In the highlights. to Over million at I of the months. INRX.XXXX the addition, take to maturing RUBX,XXX have With we next Erez XX ruble, to rate hedges the business through

Erez Israeli

trials countries the based our contribute Russia. V vaccine’s fight pandemic. XXXX started disruption Parag. on DCGI, in to having healthcare and global crisis in approval analysis by the we Hope in with beginning caused the COVID-XX evening of hope you, good and of at and final Year. morning to life program in The vaccinations returning efficacy XX.X% Recently, XXXX. India. year is you has healthy Sputnik safe the The Good around clinical and and Thank several has The from New vaccine started a are everyone. the clinical bit are arm continuing confirmed a trials we after of visibility against the Phase to point initiated socioeconomic of of this happy, normal significant the control data after III in have

our RDIF confirmed and strengthened have vaccine preferred have expeditious India. been We with partner distribution marketing the also partnership for the and as of [indiscernible] in

branded turn quarters, to saw and quarterly in markets XXXX. witnessed this once to healthy achieved We it and and last continued -- is once positive in cash yet Europe, our growth December net recover healthy India, pre-COVID higher-ever in our quarter, sequential EBITDA sales, markets as During of levels. the market we margins over growth has again turn while improvement across journey couple the demand other Russia branded of

our pipeline, on right We creating capability invest product of continue improvement healthy on model right from our position focus future of opportunities includes diversified in This our and to marketing strengthening business of and leverage building the The us to the strategy a one of sheet set by progress initiatives. each growth growth. continue processes productivity, businesses. led allowed to strong balance in digitalization well for

key are of businesses. numbers to note take highlights our this Please that references you Now, the in the respective one business section currencies. local me let in in each all through

quarter Our basis. quarterly North for a growth America decline the X% Generics with of sequential million of year-over-year and a business recorded of sales a $XXX on X%

nine base While the quarter, erosion of incremental witnessed new the the retail COVID-driven and through end Throughout in Tablets hospital including have at Tablets, Sapropterin especially levels, we and impacting we Canada new in products, the products. competition during Injection OTC product market. during portfolio less in also one launches Injection XX faced of five Famotidine Daptomycin level the demand launched quarter, of products quarter: and certain launched the [indiscernible], the We months in U.S. we signs slowdown resourcing. Overall, momentum pricing the relaunch. continued Cinacalcet, in relaunch Succinylcholine and the already

year, we focused the key the XX launches of remain of across on in launches. As momentum recent the fiscal. the up resulting maintain for the rest continue We around to market for launch ramping share

EURXX markets. XX% of growth new year-to-year product driven and growth The business seen across Europe Our of with quarter of strong the was X%. million, launches sales sequential recorded by growth

Spain. product each products and France quarter, three one launched the Italy, During new we in Germany and UK, in

growth business The of Markets double-digit. impact XX%. and been of INRXXX Emerging sales in also growth year-on-year X% sequential has crores, quarter for of year-on-year with a adjusted Our the forex growth recorded

business XX% market year-to-year The Within decline. quarter-to-quarter the Emerging Markets segment, the the on has been on after by basis constant X% gradually grew basis in currency. demand improving and COVID-related Russia

trends We saw market. CIS our improvement also in similar

China in well to the in quarter. business perform Our also continued

During XX Markets. products the across Emerging we new quarter, launched

select for markets. anti-allergy the from also and Glenmark We CIS of completed acquisition brands Russia

recorded in growth of and in X%. of growth crores with improvements demand. The well. Our market strong Wockhardt brands of performed quarter also from sale a a gradual by the the India The profit XX% INRXXX a acquired have seen year-over-year growth business was

stakeholders, platforms. channel patient partners connects access We adopting platform physician and demand are and various to expand to progressively community, improve digital with leverage

market. launched in Indian the seven the During quarter, we products new

recorded quarter have As of with on per December XXXX, XX%. we a nine and PSAI year-on-year million, sequential XX of $XX MCT decline business ranked for of MAT been number of of sales the and month December report basis. decline X% [Ph] the Other and [indiscernible]

last the our is into and benefit structural largely believe shift we product cost evolving from business that carried well PSAI first driven the response the in in was COVID-related by you higher API of of the disruptions. procurements inventory demand in our to of high-growth invest by half the as development strategic a year a At in new part is to quarter, level, to reduction we continue been the part continue the alluded financial industry customers This positioned normalized. As to level to initiatives.

R&D the we focused markets, value-accretive On our with across the of strengthen R&D to products front, to continued investments our pipeline assets.

During this the across we in States. two products markets, filed formulation global XX quarter, including ANDAs United

approval XXXX, the XX includes and NDAs. XX, filings December two in cumulative we of As pending XX have USFDA, ANDAs for XXX(b)(X) which

We also in filed Drug five filings XX including the Files made globally, Master U.S.

III working markets of progressing for at trials growth. for different Rituximab leaders of across which Phase to products are the driving our our We with We and of are committed next future biosimilar remain the pipeline wave as development. one key also on strengthen products stages

floor like the strategic growth we to strengthening building to growth. and businesses, recedes, enable target on questions long-term sustainable the With a stories, move As surrounded would pipeline progressively of our inorganic remain open priorities COVID uncertainty and including answers. the this focused growth for I key

Operator

line much. Shanti from Please very Instructions] you Advisors. Shanti ahead. Investment from the first of The Thank question is Patel Patel [Operator go

Shanti Patel

question it on will And is some verticals. in The of two, future? please throw that? capacity respect on it on determined? be number impairment various It light how situates changes, And loss, reversed light is in utilization

Erez Israeli

Yes.

Vascepa base the and had event accounting to we -- we accordance in we the see have attributed and practices, So of triggering worked events of -- for launch as the the the good Nobel the and that.

products plans and and still make we are I and them. no money -- will that I planning from launch products don’t to there these that, hope is these reverse believe to We launch

Operator

Mr. Patel, your is answer that question?

Shanti Patel

utilization various what the in of utilization, capacity respect the is Capacity verticals?

Erez Israeli

utilization? Yes. capacity The

Shanti Patel

Yes. That is correct.

Erez Israeli

have capacity so trial, the We sure enough I I’m not understand for the [Ph] visibility question.

Shanti Patel

can we XXX, produce we No, producing are XX%. only utilization suppose no. Today, means units. X,XXX so Capacity

that ratio? producing, the and installed we So capacity are much what way, how the is

Erez Israeli

capacity for got I capacity The and which enough XXXX well the place all for injectable had the in we additional then as only say as years -- need verticals. the that of FY’XX and primarily biologics. to again, and in the saying FY’XX, we is arena

solid. oral We the in have enough growth or the

Shanti Patel

Okay. Thank Thank you. you.

Operator

of line Sancheti The from is go ahead. from Rashmi you. next InCred question the Thank Please Research.

Rashmi Sancheti

Yes. opportunity. Thanks for the

in growth highlight seeing business can you of Wockhardt If what ex are integration? India kind we

Erez Israeli

Yes.

[Ph] answer listing not it? Amit, to you want are Amit? the growth. We

Amit Agarwal

question. the for thanks Rashmi, Yes.

Excluding at quarter. grew Wockhardt portfolio, the during our about base business X%

Rashmi Sancheti

And, you. the for Thank months? sir, nine

Amit Agarwal

also single months, in business grew For the nine the digits.

Rashmi Sancheti

related one-off, much only and Single-digit? this in continue the Okay, of Wockhardt can sir. this if is And quarter, And, is it integration to going in in that or has sir, expenses subsequent come? this how quarter? to this the cost quantify, will whether be additional quarter you

Amit Agarwal

Yes.

successfully our business. Wockhardt have are we ongoing what what into So now integrated our the the expenses. P&L -- portfolio we are now reflects And normal

to So our there P&L expenses are in the Wockhardt this pertaining business no one-off quarter.

Rashmi Sancheti

is quarter that the But in expenses, integration quarter? will over or it subsequent Okay. third it continue already by

Amit Agarwal

got we is in this so expenses, Rashmi, It So integration have nothing like the expenses. integration business. there is force field from this

parcel and so of business, now part continue. that So will our that is

it account basis, mentioned. in manpower Wockhardt, expenses. On basis, is of is incremental also. sequential QX On those in plant It was S&M a the there which So have the from reason is there the an QX year-on-year not cost, It reason. on also. came quarter the so -- we cost, that’s that

Rashmi Sancheti

for Okay, U.S. already maintain to on U.S. around finally, going sir. business, we this products. Got our launches XX guidance XX have are And, We sir, product launched entire the year? it. in

Erez Israeli

-- -- Yes. Well, the this is in that

Rashmi Sancheti

down finally, the would will And, double-digit huge or base the the Are Okay. sort price at launches, erosion it on price And pricing erosion? it is of it with mid-single-digit go level? the on in we or same remain portfolio. a a traction seeing last in

Erez Israeli

the from not huge. it be differs will to to continue it’s it’s that course, business it quarters So used other well the But of for us. more product-to-product. And, I in than do the in And also future. believe

Rashmi Sancheti

best. all Thank sir. Okay, and you the

Operator

Kerai and Thank is line Damayanti ahead. Markets. of next Please from Capital you. HSBC question Securities the The go from

Damayanti Kerai

opportunity. business. for on you the Thank the Continue U.S. Hi.

filing bit in the While sales U.S. we are you next I are last XX side your about it’s by and launches, quarters of expressed healthy increasing believe seeing number years. And been your on XX% three for we but around having ANDAs. few the also muted past goal in pending only

on happening the ANDA Vascepa So question launches? businesses, front? see how update on you do Remodulin pickup filings and on And U.S. generic the any second

Erez Israeli

in much previous meetings. with more So, see filings what on the I discussed filing, think next quarter. to It’s we you’re going in a line

in collision what the we would So we are quarters, [Ph] launch of QX. The terms in between the in -- the product. the same for place, happen of just as Vascepa, for are the preparing

one? another Sorry, was there

Damayanti Kerai

Remodulin?

Parag Agarwal

Remodulin, the peak. for there time in will some be some will main take us. It away time

Damayanti Kerai

Okay.

Okay. the part. impairment second And is question on my

to I’m Teva, So, of impairment And around conditions. market eight correct, acquiring for we million, from we million. taken $XXX paid already $XXX if $XXX due in around ANDAs million change have

do in remaining So, be the deterioration can value like you like further see see also if the asset condition? we market impaired

Erez Israeli

We impairments. are not any additional expecting

Damayanti Kerai

get I Sorry, that. didn’t

Erez Israeli

expecting not impairments. are We additional

Damayanti Kerai

look said we up has here? of that was very from we it API strong. you Obviously, how XH now, how But final business question, should my at so part look should business? as And at picking normalized Okay. growth

Erez Israeli

sales, business We the for more are us both important is on this going the as big as well to integration. grow external much

we working growth future. are the going to both So we on and the in API are in see

Damayanti Kerai

Okay. Sure. Thank you.

Operator

ahead. go Kunal Global. question is The next you. the of Please from Emkay Dhamesha from line Thank

Kunal Dhamesha

Hi. for Thanks taking my question.

question first is other the on expenses. the So

opening remarks, CFO that our one-time was I expense think So, the in there was that said some included.

some quantify can what the of you on expense it? nature throw you can So, was the light and

Parag Agarwal

any are rates over know, expenses for for few reduction. the COVID-related we expenses a not control, we to and very situation last started. as primarily the one I COVID It’s going And you two, freight the higher that Kunal. at end, quarters, The as been COVID have are one-off normalizes, you think the in seeing since marginal yet. few moderation the under this is is Yes. question, quarters to Thank And do reverse. next comes referred

So, during are have mentioned that litigation in which we one-off. we also secondly, the recognized that’s some one expenses one-off And quarter, I non-recurring nature. reason have as

Kunal Dhamesha

Okay.

expense quarter last around quarter-on-quarter, INRX,XXX SG&A the see our around D&A I excluding is and crores. quarter INRXXX was crores if somewhere it this So,

increase have said the costs? also would quarter attribute were be entire entire you then integration cost difference can costs to freight litigation Wockhardt two, entire the related is two, so already So, coming the in because the the that we there quarter to one-time that there in thing So right? and from is

Parag Agarwal

that’s No, not Kunal. right,

increase. of the give Let you shape the me

I remarks behind my the is signs of pickup as we marketing showing of largest seen and Russia, gradual want market and in by make the ahead in branded markets. that driven like earlier, sales to So, have some curve. the increase markets the invest said In India sure we and we growth is investment

cautious we markets. behind have a brands in manner, investing started, So, these our in

digital investing The second are we thing that capabilities. our behind is

We quality to have market, are want manage go way of we the core, a we where we front-end, the launch selection very way the to we also process product ambitious systems, -- our doctor. manufacturing entire plants, program our in the our engage to digitize we the place our with digitalizing way and our

And some sea we higher part freight. brands is the this sea partly In bit shipments. but and to freight compared investments extent, So, because shipment, of this it say rest, higher is costs the that, to is between also COVID-related, increase. To would capabilities have I I quarter, as previous a partly seen the mix one. the of behind large air also air said, some and of

Kunal Dhamesha

Okay.

or of normalize SG&A, the how brands it? think sales this new is in marketing like kind crore? INRX,XXX before Like, normal continue four at three, like for investment the look should this that next do and of So, will you it and quarters we

Parag Agarwal

Kunal, as forward-looking any we give we you See, know, don’t guidance. do --

that like otherwise, return time, evaluate the would say the the investments, if continuous then we in on investment tear But driven that continue, are a is continue. also to to must sales sales down. at we by I and growth on it also marketing, we investment we finding out I do expect same being So, point will And basis. try it we

So expenses And, normalize. would point that’s COVID-related obviously, the gradually I will one make.

Kunal Dhamesha

Okay.

second for of more question you question. And the that. a Thank a Okay. is housekeeping

around so that think this million. we quarter product impairment and FY’XX million another this around $XX price But we $XXX.X NuvaRing adds that million. of to for I three in the million, purchase quarter, allocation took did charge we was took So, $XX for million $XXX $XXX

So I’m not here? missing Like some R&D -- I to of the able that we we on am what did the product? expense capitalized did

Parag Agarwal

Yes. The difference been has That’s that interest Kunal. the the capitalized a good with standards. because in line accounting is question, of

Kunal Dhamesha

Okay.

Okay. Yes. question. Thank you. taking Thank you the for

Operator

Thank the from Bernstein. ahead. you. Nithya Please go from Balasubramanian question is next The of line

Nithya Balasubramanian

like is the Sir, on that’s but open, you. question quarter, a Thank Yes. India, Russia, markets in all branded last that SG&A the back are at the ground. my clinics China, the in Sir, the follow-up least expenses. assuming on

So costs the the also anymore? to longer come of realize that QX, the up? of that in Is and it’s partially savings back. QX gone savings reason are any why no assume there now kind base the most are you in should probably lockdown-related likely we And

Parag Agarwal

normalized, I is say would that’s that’s would to think, is we fair say, normalized, getting large a Nithya. statement. But so a back it pre-COVID yes, getting true, levels. I not to I are extent, it

Nithya Balasubramanian

back? likely that, little take Sir you a inch to can it’s not it’s I because mean fully higher

Parag Agarwal

but and sales gradually our pick control I we investments to growth. will a very maintain tight link as it up, earlier, said it we Yes, on

linked will But gradually to can these linked back can -- deliver. is that pre-COVID are you the to investments levels. go it So, we yes, ultimately, that growth to expect

Nithya Balasubramanian

you. Thank Understood. Okay.

If have you in you an those likely second Do us NuvaRing, material we mentioned question on you filed on the was or if update Copaxone, update of you on Sir, are on products the to I you us can can give products? two you a have that U.S. file. The CAT are some date? where think refiled?

Erez Israeli

I’ll Yes. do that.

will we of for -- the is and in the response we in FDA. NuvaRing, the we CRL will submitted [Ph] now court launch. the for ball -- continue on FDA the And to wait response from the December. And So, also they prepare accordingly, the the

now As we for the it. addressing CRL received we and are Copaxone,

status the is assets. this two these of So

Nithya Balasubramanian

Copaxone Sorry, Did have Erez, you that and I that hope CRL right, I response. are received another on got I you a preparing got hear right?

Erez Israeli

correct. Yes, Yes.

Nithya Balasubramanian

you likely resubmit? when on to timelines Any

Erez Israeli

We months. next within few are believe be but testing will it still I the

Nithya Balasubramanian

Got you. it. Thank

Operator

Thank from line Equities. you. the from Bang ahead. The is question of Nirmal next Manchanda Institutional Vishal Please go

Vishal Manchanda

opportunity. the for Thanks

side, like Wockhardt for quarters? is normal QX domestic seasonal is -- across or the kind Wockhardt quarter element portfolio the to the On of portfolio all a this so this a large there the

Parag Agarwal

It say. -- Yes. seasonal element, would no is there significant is I

this Wockhardt believe It earlier, portfolio said at And portfolio. we will expectations. exceeding is I well. levels internal maintain is we performing As growth that similar for

Vishal Manchanda

one the second Sputnik And vaccine. Okay. on

be whether So, private could marketing to the in just India? need you to sell or in you wanted and markets be to distribute sale whether allowed to would market understand it the a this also this And involve would will government? outside

Erez Israeli

the So, are well as as market. the private go government, to to planning both we

Of the that course, priorities government come they that. with do the in and see from will about accordance how Indian guidance

still So was sorry? or what in this also question, the be in in of future. is And the part the discussion second discussion will

Vishal Manchanda

outside maybe Emerging allowed Would to India, be sell Markets? we also it

Erez Israeli

Yes.

the [Ph] collaboration to regarding branded also the AF are discussing auctions to increase we So, markets.

Vishal Manchanda

my Okay. That’s from side. Thank you. all

Operator

Neha The J.P. is line Thank Please Morgan. Manpuria of next the you. from go ahead. question from

Neha Manpuria

indicating you’re about you level? line sales taking how are here? the and at back Wockhardt X% here? in you the momentum from Thank growth heard for is in imply correctly, to question. I our that drive case, my incremental will from the that look peak or excluding in Wockhardt we should the Is What from pretty Wockhardt numbers growth that correct growing what business for If revenues would quarter, India the said is Wockhardt, which that, much

Erez Israeli

from I will well, Neha. continue believe that products grow as Wockhardt to the here

Neha Manpuria

is that already low-hanging drive growth? there And what is the in numbers? would in fruit of It -- the most

Erez Israeli

demanded. product primarily and behind that product full the this has in this to activity our think it I was stop ability to invest that fact

cost that so So, is the working the as far. both synergies is have to as and -- sales well well anticipated the we it synergies, this

Neha Manpuria

Understood. Okay.

Okay. not to but if indicate, this point I’m opening was out? that your there specific remarks, you and quarter, the in inventory. both sure increased you caught if working to here seems anything capital like receivable our in Could have would I

Parag Agarwal

Yes, Neha.

receivables, I So, discounting no is slightly approximately one-third are increase of roughly INRXXX because crores. longer in say higher would is and the because on of India. receivables U.S. of interest around it or finding in rates lower that economical because that’s we than the the drop in

So that’s the fundamental reason.

drivers. enter The rest finally, increase growth sales a that of we that there again, normal increase driver. our milestone no as And is of is sales of from second the the we increase. that the reason an is We would and safety of and want is because overall, due to On part absolutely I is we QX. it growth make say, levels underlying because another business payment received the the Aurigene sure to receivables are see. But disruption it had planned inventory, adequate stock is

answered are question. these the I’ve for the the increase hope So, working I capital. in reasons

Neha Manpuria

Understood.

Okay. enough. Fair

other erosion any probably specific U.S. clarification that or across the quarter-on-quarter, related could we one and -- portfolio that the was and the assets product on Just price continue? and across to that was business, it saw

Erez Israeli

portfolio. one specific. the to of more product course the it’s entire not business, so the It’s normal starts like than but it’s and [Ph] not It

States the in want need if happens defend is we United to when to what service [Ph] to always we these react cases. coming it competition like So,

Neha Manpuria

Understood. Thank you.

Operator

is Capital. Vallum from Thank the The line you. Kunal question Mehta of ahead. Please go next from

Kunal Mehta

much thank Sir, for first opportunity. the Sir, question very on you my NuvaRing. was

product write-down understand five-year think behind product. from because the amortization. product the of to it to neutral still behind consider for this practically I earnings it because wanted the was, course, the accelerates -- is a it’s wanted you rationale it’s an perspective, viable But rationale whole the writing understand period, the just down it just entire So, of and, when the

Erez Israeli

so launch approval change course, the to will the this we course we of we the in around event the with of time CRL both Well, on depends, standards and as And rationale only asset. accounting of model the had obtain accordance that the Teva, we the is triggering address this depreciate product. now have

but out are are approve -- FDA will to can it launch Hopefully, of we still product. you we So yes, product it. committed this the the money and and right, then make

Kunal Mehta

-- the wanted the Markets. I Emerging to Understood, regarding understand sir. had Sir, I second question

the which in Emerging opening you sure Most done a dedicated of also Russia, filings say, this ex-U.S. mentioned Emerging lot ex-U.S., would remarks and other year, quarter this CIS, including the these markets, you the I’m So, Markets, the are of and Europe have I in also. especially smaller Markets, to ones.

which understanding -- sense, three So, say, longer what XX% we to sense over have contribution new just Markets targeting the the to the on you three lot down portfolio is course, markets? any perspective, whereby an have I would the U.S. but there grow available understand, targeted the wanted a the product any the launches jotted by, while -- us in to these then of which years’ next could of of product understanding understand Emerging us of we the for could side, maybe target give mean, on, two, the years? markets if we let’s launches two, be are say, new give you let’s these over please

Erez Israeli

the and this area. so significantly institutional am we targets. giving yes, product on in these to the expecting, not hospital contribute So, growth that especially But are will I

in many as possible for what portfolio you try to to for recall, we that’s are order we dollar more as products investment markets and we and R&D, are in find much strategy, get discussed sales global that when -- our taking dollars doing. As much more

in doing globally the more the the most -- and in -- to are in markets for some now, more doing filings that and specific rest of we a of and So, are market see of you’re necessarily of going them and of rest not the market. we rest development the

in the starting say it’s this it’s or discussed. So, of in I we line with execution. the strategy court want have that court of -- the the And the to of

more. and more file to going are We

Kunal Mehta

Understood, sir. Understood.

understand could side, complex you say, about last final the end, roughly in business, I injectable your [Ph] regarding have talking on outstanding between you the I’m outstanding are could the was portfolio mentioned rather strategy And side? just which of simple that from financial And, from one-fourth the down how if -- a the -- to from us XX sir. AF on the Just -- of from the year again we on was I break and, U.S. filings question please -- ones give would sir, ’XX. wanted my comes FY the the you’ve number of many in in U.S. at injectables? ANDAs, injectable I course, I looking it injectable -- the a portfolio.

say, want of So, -- any portion take the on -- -- of we fact products market. I considering are any of I I business the the the this majority would ahead? off-patent think that portion to I good think in now how Because mean, this perspective a

So -- for the next five years.

on perspective business U.S.? any So, in this to how the we ahead want take

Erez Israeli

Yes.

impact want yes, will products for is and are filed And with global that that more we -- to including -- in in and most more products. U.S. products, injectable of global U.S. the inject U.S. the Our of develop our the The investments on be -- injectables our is course, area

than higher proportionally, be be past. to in they injectables will So, the used the

simple wish -- U.S. you injectables U.S. grow and will in the complex and and if the So, [indiscernible]. complex --

Kunal Mehta

Okay, sir.

the only contribution current say will contribution -- the -- the have move three, if this of that’s assuming want portfolio XX% terms upwards this to four will the in -- we to… I way over So, move overall next years you that do

Erez Israeli

the the of injectables bigger will in Yes. future. The weight be

Kunal Mehta

sir. All the best very it, you. the future. Got you for Thank Thank much.

Operator

from next G the Please line from The you. GS is Investment. question Thank go Vivek ahead. of

G Vivek

tailwind we my now understanding and instead getting back the was QX the are that we COVID single-digit erosion erosion severely, the due Is having price correct faced? pharma our of sector consolidation to to weight of is Yes. weakening price on time

Erez Israeli

talking are United You the States? about

G Vivek

very world -- -- now Yes. COVID entire of U.S. performance India sector responsible to QX rest of for is weakening. basically, in market, pharma and and due that the were for good in QX, tailwinds the

Erez Israeli

Yes.

the in are the in -- areas. are yet are cost the think pre-COVID it I impacts pre-COVID -- in on not are depends behavior market. we COVID or level we so the So, of still But certain -- and we

We For used in to these physicians certain and affected are ability softer like by that. people we still do the stuff see the do are see U.S. meet products than products be. they that of example, the to

price terms of In erosion, to the U.S., primarily competition. related in it’s

this is and but of quarter the QX absolutely COVID when India, it’s case So what almost a erosion, the which to a of is by pickup not is so we impact. see large the the called coming, in India normality. activities much In a competition came was price

there not yet, are we but We are there. almost

G Vivek

the similar erosion the for it prevailing And severe? situation is oral also is or also mostly Injectable price solid? for injectables

Erez Israeli

price related to COVID. erosion Yes. solid. It’s The the case not competition to by It is of is affected oral in injectable is States. segments United and coming. It’s related both the that both in

G Vivek

some and gap any -- after good part Company has the in maybe And India? and FDA now India after inspection five FDA any plants approved began were due plants again And in also. FDA our of for inspection for our our all was

Erez Israeli

great requirements the actually. It’s that is did good get any USFDA inspection from USFDA yet. And news it’s news, We starting in soon. not a a general, the

G Vivek

Okay.

Operator

Thank The from Capital. the line question Please from go you. of Nitin Agarwal is DAM next ahead.

Nitin Agarwal

the taking for It business. question. Thanks all. U.S. Hi, my is on

been we’ve but far, XX so sales year, products our not in as mentioned, launched, much pickup you there’s the quarterly run rate During number.

that around assessment? of this your of meaningfully in quarters? XX the Does it couple number being is to stuck take move what to XX So, kind from last

Erez Israeli

repeat question. not Sorry, could please? it, the I you Can Sorry. hear well

Nitin Agarwal

Sir, we’ve new still be year the quarter below to continues million sub run sort is of U.S., launches rate our run per rate. the XX around but was, $XXX had to my during in question

launches assessment your a the fact fairly to even it not number take in of year. launches done meaningfully So, really that scale not so what’s I this -- for us been large -- up clearly been mean, it’s is We’ve given number of hindrance far. levels from these to breakthrough

Erez Israeli

we the know, the the growth portfolio actually, It’s And of hopefully, of also should and create moving launching attracting. looking should type are So, us this as a we you give a that are product of the forward growth launching. products launches of I we -- it’s -- all, that believe first the is are number combination the and for. it that --

it’s the call going also are the what you not just it’s to quantity, the product quality, the of So size launched. but that the

are products And coming the of interesting. up some

Nitin Agarwal

income. on secondly, And Okay. the business the drop adjust generic in gross had margin, this you if for sharp a margin fairly we’ve licensing the gross quarter, [Ph] with

normal margins But should longer we are this model generic of -- the with is this? margins? the going no we the given that and go to sort export read gross new gross should generic mean, how how business fact how forward, incentives I the we Now, there? look now should

Erez Israeli

past, the not se. managing per the in gross shared we we Like Yes. margin are

EBITDA managing to activities. in are the or already are stay that this for in and a of and are we this mix are that we We even the we margin, of the XX% and we neighborhood a it’s staying sticking lower actually to and shared in planning neighborhood may maintaining Gross be matter past while.

and for in have margin, So, will will take that we we us a profitable give if with the a it EBITDA, gross will it. XX% like -- the product growth -- then example, be

not So, the are managing percentage. we

general, gross of what are around the And We that we’ve still we managing the were margin stay said past. will nominal the the neighborhood gross margins. we that in in are we there, and

-- per So managing not we are but se.

now. a they solid with below that and be we it’s -- therefore this continue that number it’s will had businesses, We will

Nitin Agarwal

luck. Sir, you Okay. Best very much. thank of

Operator

next The from line is the question Sameer Baisiwala Please Morgan ahead. go Thank you. of from Stanley.

Sameer Baisiwala

is Vascepa. an important everyone. good Yes. is evening, launch, this Thank and which Sir, you

this. entrant -- as talk. helpful. question I’m or any first ask with improve the the volume we is you the let sure like what regular can like So it go a along? not would your lower thoughts how So, what constraint me But and high-value very be launch, on is margins much the should

Erez Israeli

be can that so I like -- tell anything reasons. us. that for Yes. I going more can quantities you for to cannot not important going to Sameer, launch an this. It’s absolutely discuss I say. these But or am I

Sameer Baisiwala

for Okay. high-value you would Sir, confirm regular be that can you? a this launch

Erez Israeli

yes. for This would a us, high-value be launch

Sameer Baisiwala

Okay, V. question you. second Sputnik was Thank Sir, great.

if sourcing million earlier your second, your the change vaccine? plan great? what’s volume target, you And be XXX would for Just tell to is and there can us, launch that any timelines

Erez Israeli

is the million And XXX So countries. we This XXX now update. one is million. are discussing more

we if we of actually, [indiscernible] most the submit launch already will to application. are We that the XX,XXX hope out now [Ph], received train rolling we in can see we And get by DCGI -- [Ph]. we And can and large initiatives face March.

Sameer Baisiwala

what it be some doing the And about Okay. manufacturing? RDIF from partner your you mean, plan? I would sourcing taking you be would also or

Erez Israeli

from bit So, it a India of Russia most our with from little partners. and

Sameer Baisiwala

outsourcing is Very This it. Aurigene Got of sort pre-Phase helpful. of on Sir, the I Okay. is Exelixis. out-licensing question AURXXX. other the to

stage So, it’s a very out-licensing. early

You So, this? and Phase the have behind or thought II process early taken even Phase to out-licensed? what’s have III then could would it

Erez Israeli

Yes.

So, we interesting delivered or and very Aurigene developed pipelines.

are to develop Some of stage. to them, we planning to later continue

reward Aurigene of self-sustained risk terms are be in to allow monetizing early to order to management. we them, planning Some stage of in

very So, I interesting think a forward. that pipeline has very, Aurigene going

will keep if we an not will early that invest, monetize do to those we later. want to will and -- So, that beyond stage, continue you

Sameer Baisiwala

that you if mentioned One XX%. if fill to I’m did very Okay. internal you’ve one, EBITDA if of it that And sort close I already. if as aspiration you are in Parag, can. the not wrong, so, margins final and

outlook that? for levers margins you. and So, what’s the your Thank for what in are

Parag Agarwal

Yes.

XX% said, I a the of aspiration are have levers is as we basis. are the our lever we number in a it. consistently of sustainable able to deliver And EBITDA deliver to not we while and on XX%, indeed yet to XX% deliver So,

driving re-formulation, the it hard I for top how is we machines biggest I productivity vendors chain. alternate growth efficiently, chemistry, can across and on. second and we sales so I products and mean, about lever, our to also And that how more on. are the and value in think yields, the detail include obviously, talk line so drive the materials finding marketing run can is very that we in our

make some and also behind back to need I productivity habit. our a driver a So it as we business we point invest is want out we I capabilities of capabilities. big productivity, the drive it But to earlier. must that, into and Digital spoke brands behind

so growth So important margin, it’s can levers potentially a but the behind sustainable invest the can future. business drive we that the improve that in also that for -- we the we you very give

And EBITDA should we in that XX% few are quarters you next would the think say in escalations. can I So I that we neighborhood the of range. expect that in be

Sameer Baisiwala

very great. Okay, and very helpful. Thank you much

Operator

Prakash Please is question go line Axis next of The Capital. you. the from Thank ahead. from Agarwal

Prakash Agarwal

Yes. opportunity. for the Thanks

follow-up over then quarter, few maths if sustainable cost get I over there or licensing would on a my will this you quarters. Just are on a that happen if mentioned this, XX% XX% are few strip mentioned continue right, structural quarters but some clearly, around basis, and which you income particularly you the upgradation,

mean, two at not are we -- there trying last XX%, these currently to I here. get a So we XX%. I’m at How XX%. together we’re Actually, quarters two that are near just basis is XXX gap

that So want here? you. be you you cost to one-off Or helpful. the if a that? would So, that is say explain truly could Thank

Parag Agarwal

right is cost not the entirely that That’s one-off.

is impact all, X%. the payment first that, Aurigene around the of clarify me of milestone Let

is EBITDA number delivered I our EBITDA is XX% even have in quarter XX% our and the also and if like range. Proprietary regularly. say during the We do margin the and around must a we normal excluding that out-licensing milestone in it Biologics businesses, drive business of Products Aurigene margin fairly of payment,

to not So is or the I’m milestone payment. exclude it sure fair include

we business. behind and earlier, are investing the said driving are we productivity also I As

as will now right our in of drive margin are we to long-term that XX% the We continue aspiration. and neighborhood

Prakash Agarwal

you can recurring one-off apart from you are mentioned please? one-off, confirm, the increase the small Okay. can in like and expenses And that quantify you

Parag Agarwal

can I quantify don’t one-offs. the I think

behind an investment increase it the We is our but do of cost, said, due is to I also it brands. in terms it growth. expect In continue, as to

manage So a return on to this we to and growth. went therefore, process investment have

deliver. level this expect is So, in summary, growth directly continue, of that I we investment to sales linked think but we this the to can

Prakash Agarwal

Perfect. helpful. Thanks helps. Very

pick-up of it terms the action But for filing with last in I the so is we is momentum? and been China, everything muted. the what on next approvals see it started is do level nine in the of when has sir, And ground months? Secondly, COVID, to round think us? How

Erez Israeli

us. for doing So very China is well

despite in already pipeline XXX out growing products filed COVID. also the that are of and in We shared about a before. And list China we XX we products of

So we our with break much China. [Ph] very on are plans for

Prakash Agarwal

Sorry, and you right, that Did hear XX products mentioned growing double-digit. I sir? filed

Erez Israeli

say did What not I and is anything I about said XX double-digit.

Prakash Agarwal

Okay.

we But COVID? are Okay. China despite growing in

Erez Israeli

COVID and nicely. We and -- of the we we products are top have even market. And already the in growing in despite XX China that products submitted already and

Prakash Agarwal

the you. we That very on Perfect. And, helpful. sir, have. business PSAI API, Thank that is

clearly, you first very supply quarters heavy, mentioned two disruption. stocking So, the

see So outlook going us last forward the call you business? the to digitally in in and how we want important mentioned do we given this invest to that that

Erez Israeli

integration increase It will [Ph]. over maybe also important We quarter-on-quarter it will us. API level I grow, to business. want It the would for but grow. and grow will our not it’s of very grow time big And

Prakash Agarwal

not the if parts, two wrong, has services. in it API And I’m pharma the

carved So -- you and Aurigene out out it. of then

for just of growth business? understand the trajectory each the wanted I to So,

Erez Israeli

Both will grow.

will both grow. We are giving guidance, but

Prakash Agarwal

is any update scheme? in we And [indiscernible], overall terms approval lastly, on where are in sir, of Understood. the there Okay.

Erez Israeli

Which one, sorry?

Prakash Agarwal

[indiscernible].

Prakash Agarwal

Yes.

Erez Israeli

ahead. The [indiscernible] go

Amit Agarwal

Yes. Yes, Prakash.

we the that -- So, so product. the program is [indiscernible], -- run are by they filed

but FY’XX, we any We haven’t confirmed in date. heard not anything have we expect about approval, do but

Prakash Agarwal

Okay. all the and Thank best. you

Operator

gentlemen, over and the comments. to Thank will question. take due I that last as hand conference Agarwal for now we time to Ladies you. Amit the constraint Mr. closing

Amit Agarwal

us of Relations everyone to team. queries, case for joining Thank earnings for you. please the Thanks, out In further reach call. today the any Investor

Operator

may and lines. Thank disconnect conference. Ladies this us concludes Laboratories joining and you behalf Reddy's your that now of you. Thank Limited for on Dr. you gentlemen

Dr. Reddy's Laboratories Limited (RDY) 30 Jan 212021 Q3 Earnings call transcript