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View Annual Report DR. REDDY’S LABORATORIES LIMITED | LABORATORIES REDDY’S DR. ANNUAL REPORT 2013-14 ANNUAL REPORT DR. REDDY’S LABORATORIES LIMITED ANNUAL REPORT 2013-14 HEALTHY FOREVER HEALTHY HEALTHY DR. REDDY’S LABORATORIES LTD. 8-2-337, ROAD NO. 3, BANJARA HILLS, HYDERABAD 500034, INDIA www.drreddys.com FOREVER Contents CHAIRMAN’S LETTER 2 CELEBRATING GOOD HEALTH FOR DECADES 4 DOING WHAT MATTERS MOST 6 KEY PERFORMANCE INDICATORS 8 CASE STUDIES HEALTHY FOREVER 10-11 METFORMIN: SMALL IS BIG A FIRM FOUNDATION FOR SUSTAINED R&D INITIATIVES 12 16-17 VIVA: COLLABORATING TO CURE BUILDING WORLD-SCALE MANUFACTURING CAPABILITIES 18 20-21 SMT: IMBIBING PATIENT-CENTRICITY HARNESSING PEOPLE POTENTIAL 22 24-25 PROMIUS PROMISE: GUIDING RIGHT BOARD OF DIRECTORS 26 MANAGEMENT COUNCIL 30 BUSINESS RESPONSIBILITY REPORT 32 MANAGEMENT DISCUSSION & ANALYSIS 50 CORPORATE GOVERNANCE 62 ADDITIONAL SHAREHOLDERS’ INFORMATION 79 FIVE YEARS AT A GLANCE & RATIO ANALYSIS 90 SECRETARIAL AUDIT REPORT 92 DIRECTORS’ REPORT 94 IGAAP STANDALONE FINANCIAL STATEMENTS 103 IGAAP CONSOLIDATED FINANCIAL STATEMENTS 155 EXTRACT OF AUDITED IFRS CONSOLIDATED FINANCIAL STATEMENTS 207 DR. REDDY’S LABORATORIES LIMITED STATEMENT 212 210 ANNUAL REPORT 2013-14 HEALTHY INFORMATION ON FINANCIALS OF SUBSIDIARIES 211 FOREVER NOTICE OF THE ANNUAL GENERAL MEETING 212 DR. REDDY’S LABORATORIES LIMITED www.drreddys.com Aff ordable healthcare for the world is a mission we have dedicated ourselves to, since inception. However, as the world around us changes, the means to achieving our mission must evolve at every step. It is important that we build the necessary capabilities and competencies that are aligned to emerging and unmet medical needs across the globe. With this realization, we decided to fi rmly focus HEALTHY on getting diffi cult to produce medicines fi rst- to-market. This is in step with the strategic FOREVER priorities we have outlined for ourselves. In FY2014, we not only reported excellent numbers but took eff ective steps towards fulfi lling our priorities. We tasked ourselves with identifying the right products to focus on and building capabilities across our businesses. We strengthened our R&D infrastructure to remain ahead of the curve and worked on creating the relevant scale for manufacturing. And, we are developing a talented workforce who can drive our vision from the ground up. We believe these three initiatives will help bring our mission to life. HEALTHY FOREVER Chairman’s Letter DEAR SHAREHOLDERS, Profi ts after tax (PAT) was `21.5 billion I am pleased to share with you the fi nancial – an increase of 28.2% over the previous and operational results of our Company for year and was at 16% of consolidated FY2014. In a nutshell: revenue. Consolidated revenue was `132.2 billion The high point has been the 27.4% growth – up 13.7% over the previous year. In in revenue from Global Generics in FY2014, US$ terms, this amounted to US$ 2.20 which stood at `105.2 billion. This was driven billion. largely by North America and the emerging Earnings before interest, taxes, markets. The low point was the 21.9% decline depreciation and amortization (EBITDA) in revenue from Pharmaceutical Services and grew by 19.3% to `33.2 billion, Active Ingredients (PSAI), which reduced amounting to 25% of consolidated to `24 billion in the course of the year. This revenue. was due to lower demand from several Profi t before taxes (PBT) was `26.6 major customers coupled with a fewer billion – which was a growth of 22.7% launches compared to the previous year. over the previous year. In US$ terms, it Hopefully, PSAI’s performance will improve was US$ 443 million. substantially in the coming year. 2 DR. REDDY’S LABORATORIES LIMITED | ANNUAL REPORT 2013-14 CORPORATE OVERVIEW/CHAIRMAN’S LETTER Company successfully introducing innovative Reddy. Your Company should be able to and limited competition products to meet steadily introduce a large number of diffi cult critical unmet medical needs. to produce, innovative medicines – oral formulations, injectables or biosimilars – and In the course of the year, nine new products do so year after year. We should be among were launched in North America. The major the global best in R&D and new product ones were (i) decitabine, a complex injectable development. We should have manufacturing to treat blood cell disorders including acute facilities that not only pass the most myeloid leukemia; (ii) azacitadine, also for stringent tests by global regulatory agencies blood cell and bone marrow cancer; but are also recognized as outstanding in (iii) zolendronic acid, to prevent their engineering, design, quality, health and osteoporosis; (iv) divalproex extended safety and margins. We should have best release, for treating seizures and epilepsy; in class employees that work together in a and (v) donepezil 23 mg, to treat patients positive, engaging environment to create with dementia. These types of highly an enterprise that each is proud of. And specialized medicines – be they in oral forms together, our Company should be known as or in injectable dosages – were not produced a nimble, innovative provider of medicines by Dr. Reddy’s earlier. Thanks to systematic that address critical yet unmet medical needs investments in R&D and better organization and, in doing so, earn greater returns for our of both intellectual property rights as well stakeholders. as the planning of a pipeline of specialized products, your Company can today provide Are we there? Not yet. Are we getting there? tough-to-make generics to patients all over I believe that we are. With more confi dent the world. and determined steps with every passing year. During FY2014, Dr. Reddy’s R&D expenses amounted to `12.4 billion – an increase of My belief is that we will see an even better 62% over the previous year and amounting to FY2015. We have all the ingredients in place. Profi t is important. But to my mind, it is an 9.4% of sales. This is an essential ingredient We need to make them work as I believe we enabler and not an end in itself. Ultimately, for growth and the basis for your Company to shall. the raison d’etre of your Company is create innovative medicines that meet unmet to continuously improve patient care – patient needs. Thank you for your support. The and do so by providing innovative and management, the Board of Directors and aff ordable medicines across the globe. I I am happy to inform you that FY2014 I cherish it very much. look at performance through the lens of that also saw 13 product fi lings in the USA. fundamental objective. Cumulatively, 62 Abbreviated New Drug With warm regards, Applications (ANDAs) are pending for Though we have miles to go to become one approval from the US Food and Drug of the best in the world in meeting this Administration (USFDA). Of these, 39 are objective, I have the satisfaction of saying Para IVs – out of which we believe nine have that we are making good progress on this ‘First to File’ status. These are the pathway to G V Prasad front. Consider, for instance, your Company’s state-of-the-art growth. Chairman & Chief Executive Offi cer performance in North America Generics in FY2014. A growth in revenue of over 46% to What is my vision for your Company? `55.3 billion was mostly on account of your A company which was founded and nurtured by a scientist of the caliber of Dr. K Anji 3 HEALTHY FOREVER Celebrating Good Health For Decades FY2014 CONSOLIDATED HIGHLIGHTS Good health is everyone’s STRENGTHENING A GLOBAL MISSION REVENUE primary need. At Dr. Reddy’s, we Our corporate mandate is to create greater realize this and strive to help patients access to aff ordable medicines and reach `132.2 bn across the world gain access to aff ordable patients worldwide. We have a strong 13.7% growth YoY healthcare. This objective underpins our presence in key generics markets globally. business strategies. Our medicines and services are available in EBITDA North America, Europe and the emerging We are a global organization, with a diverse markets of Asia, Africa and South America. basket of products designed to off er solutions This helps us stay close to patients, doctors, `33.2 bn for unmet medical needs and better access healthcare providers and business partners, 19.3% growth YoY to existing medicines. Our off erings cover wherever they are. active pharmaceutical ingredients, branded PROFITS AFTER TAX formulations, generic drugs, biologics, We supply active pharmaceutical ingredients specialty products and New Chemical to other generics companies across the Entities (NCE). world to help them quickly bring medicines `21.5 bn to market and create aff ordable options to 28.2% growth YoY We are headquartered in Hyderabad, India, high-cost medicines. We also help innovator with a presence across 20 countries. Our companies get their proprietary medicines FULLY DILUTED EARNINGS PER SHARE manufacturing facilities span 24 locations, to patients faster by providing a range of supported by fi ve technology development products and services. centers, an integrated product development `126.04 facility and two R&D centers. North America garnered the largest share of 28% growth YoY the revenue pie in FY2014. TOP 10 PRODUCTS NORTH AMERICA INDIA RUSSIA Decitabine Injection Omez® Nise® OTC Omeprazole Mg Omez-DSR® Omez® Azacitidine Nise® Ketorol® Metoprolol ER Stamlo® Cetrine® Zolendronic Acid (Reclast) RedituxTM Ciprolet® Fondaparinux Stamlo BetaTM Senade Omeprazole DR RazoTM Sirdalud Tacrolimus Razo-D® Ibuclin® Atorvastatin AtocorTM Novigan® OTC Fexo Econorm® Femibion 4 DR. REDDY’S LABORATORIES LIMITED | ANNUAL REPORT 2013-14 CORPORATE OVERVIEW/CELEBRATING GOOD HEALTH FOR DECADES 19,000 20 countries GLOBAL WORKFORCE GLOBAL FOOTPRINT SALES & MARKETING OFFICES RESEARCH & DEVELOPMENT CENTERS MANUFACTURING FACILITIES HEADQUARTERS FY2014 FILINGS & LAUNCHES 62 61 54 ANDA FILINGS DMF FILINGS NEW PRODUCTS 13 US fi lings were made in FY2014, 12 DMFs were fi led in the US, 13 in New products launched in FY2014, of which include 1 NDA fi ling under the Europe and 36 in other countries.
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