Dr. Reddy(US:RDY)2023-07-26 21:00Financial Data and Key Metrics Changes - Consolidated revenues for Q1 FY '24 were INR 6,738 crores (USD 821 million), representing a year-on-year growth of 29% and a sequential growth of 7% [5] - Adjusted for brand divestment income, underlying growth was 35% year-on-year and 12% sequentially [5] - Reported EPS for the quarter was INR 84.22, with operating working capital increasing by INR 710 crores (USD 87 million) [7] - EBITDA for the quarter was INR 2,137 crores (USD 260 million), with an EBITDA margin of 31.7% [128] Business Line Data and Key Metrics Changes - North America generic business recorded sales of USD 389 million, a strong growth of 69% year-on-year and a 25% sequential increase [118] - India business sales were INR 1,140 crores, with a growth of 14% excluding revenue from brand divestment [119] - Emerging market business recorded sales of INR 1,155 crores, with a year-on-year growth of 28% and a sequential increase of 4% [134] - The PCI business saw sales of USD 82 million, with a year-over-year decline of 11% and a sequential decline of 14% [13] Market Data and Key Metrics Changes - The Euro business recorded sales of EUR 57 million with year-on-year growth of 13% [12] - The Russia business grew by 77% year-on-year and 7% sequentially in constant currency, driven by seasonal demand [134] - The company expects sales to improve in the coming quarters due to increasing volume pickup and new product launches [134] Company Strategy and Development Direction - The company is focused on building a healthy pipeline of new products, including biosimilars, and has launched eight new products during the quarter [6][12] - The company aims to ramp up growth in the India business by scaling up recently acquired brands and improving field productivity [13] - The company is maintaining a disciplined approach to cash management and acquisitions, with a focus on strategic fit for any potential acquisitions [14][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth momentum and strengthening core business through productivity improvements and market share gains [14][115] - The management noted that price erosion has reduced and is expected to continue, contributing positively to future performance [17][19] - The company anticipates significant growth in China starting from FY '25, with ongoing investments in R&D and product development [50][68] Other Important Information - The company has entered into a collaboration with the Bill and Melinda Gates Foundation to develop injectable contraceptive drugs for low and middle-income countries [132] - The company has a net surplus cash of INR 4,985 crores (USD 608 million) as of June 30, 2023, providing financial flexibility for future growth [129] Q&A Session Summary Question: What are the primary drivers of revenue growth in the US? - Management indicated that the growth was driven by a combination of volume-based growth, agreements with customers, and a reduction in price erosion [123][138] Question: How sustainable is the growth seen in Russia? - Management noted that while the growth momentum is expected to continue, the Russian market is volatile and may fluctuate [146] Question: What is the outlook for EBITDA margins excluding Revlimid? - Management expects EBITDA margins to remain above the threshold in the coming quarters, supported by volume agreements [143] Question: How does the company plan to achieve a more diversified geographic mix? - Management stated that innovation and new product launches will be key to achieving a more balanced revenue mix across geographies [62][64] Question: What are the company's priorities for capital allocation? - Management indicated that acquisitions in India and emerging markets would rank higher, with a focus on strategic fit and reasonable pricing [65][66]