Dr Reddy's Laboratories Profit Up 11%, In Line With Estimates | NDTV Profit - video Dailymotion

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- DRL's growth outlook for U.S. market - Plans on India business and more   Watch CEO MV Ramana in conversation with Monal Sanghvi. #Q3WithNDTVProfit   Read: https://bit.ly/42g9fAZ

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00:00 Hello and welcome to NDTV Profit.

00:02 Our guest today is Mr. M.V.

00:04 Ramana, the CEO of India and Emerging Markets at Dr. Reddy's.

00:09 Welcome to the show, sir.

00:11 Thank you.

00:12 It's been a wonderful quarter.

00:14 Profits have risen 11% in line with estimates.

00:18 Revenues have come in around 7% up.

00:23 Margins at 21.8 versus a 28.7.

00:26 And the analysts had pegged it at around a 28.4.

00:29 So slight marginal weakness there.

00:33 Apart from that EBITDA is up 4%.

00:36 So I'm going to break down this performance and begin with the US TETRI because I think

00:41 that is what is attracting a lot of interest and investors want to know.

00:44 So what exactly, how much is the rev limit contribution and what is happening to the

00:50 base business?

00:51 Because I believe the last conversation we had, we were experiencing some relief on the

00:57 price erosion front.

00:59 And this time we've again mentioned that there has been some upsetting that's happened because

01:02 of price erosion.

01:03 So what's happening on that front?

01:07 So what's good in terms of the US business is both the base business is growing and also

01:14 the contribution of the generic rev limit is also continues to be meaningful.

01:20 In terms of the price erosion that is quite connected to the industry that we are in.

01:29 So that continues but overall the performance of US has been strong for the quarter.

01:35 So also there's a lot of acquisitions that have happened.

01:39 Four new launches and then you've announced the acquisition of a women related portfolio.

01:45 Also something on the medicine for the nervous system.

01:51 So what exactly is happening?

01:53 What is the kind of launch pipeline that we have for the next two to three years in the

01:57 US?

01:58 Also on Rituzimab, the Bajopalli facility we've said that we are expecting a revert.

02:04 Still there's no revert but what is the kind of timeline that you have in mind for the

02:07 product?

02:10 So when it comes to the acquisition of Minolabs, this is a company that has products which

02:18 is a combination of probiotics and natural ingredients for menopause.

02:24 Women's health is a category that we picked up as far as the consumer health is concerned.

02:28 As you know in terms of our effort on Horizon 2, consumer health is a focus for us in the

02:35 US.

02:36 So within that the women's health is growing and we felt that it is meaningful for us to

02:41 pick up this opportunity with the acquisition of Minolabs.

02:47 The other I think is a collaboration that we have done with Koya which is for a specific

02:53 indication, neurodegenerative disease of ALS.

02:58 That is where we have got rights for certain markets and we've invested some amount to

03:05 fund the clinical trial that product is expected to get into phase 2.

03:10 So a lot of what I've said is to look at opportunities to grow the US business beyond the generics.

03:18 Having said that, there are several products that we are working on, products that matter

03:24 for the US and we expect to take them into the US market over the next several quarters.

03:32 So what is the kind of run rate that we could expect and the growth that you would see in

03:36 the US market in the next 2 to 3 years?

03:38 This is excluding the rev limit.

03:42 So as you would remember, we had said that we would target a certain high single digit

03:52 growth in terms of our business.

03:56 We are continuing to launch several products in the US.

04:02 Our expectation is to launch about 25 products every year in the US.

04:06 We will continue to work on them and they will obviously be driving the growth other

04:10 than the growth of our base portfolio which is where we have been also gaining the market

04:17 share.

04:18 Sure sir.

04:19 Sir, India business growth has been slightly muted at 5% and I believe the last time it

04:28 was because of a delay in the acute season, also pressure from NLEM.

04:33 Just wanted an outlook on what is going to happen on the India front because this time

04:38 also it's been the same thing and also the WPI index in the coming year is splattered

04:44 so NLEM impact on that will also remain.

04:48 How do you see the whole of India business panning out?

04:52 So India business has been on the lower side in terms of growth because of two issues that

04:59 have impacted us.

05:00 One is a planned decrease of prices of sigmas and second is an impact in terms of the divestment

05:07 income that we had last year.

05:10 So there are three apart from the fact that the efforts to grow the core business continues,

05:16 the three levers that we are adding to the India business, one is how do we get access

05:21 to innovative assets whether they are NCs or NBs or CARTI.

05:27 The second is in terms of the consumer health, both OTC as well as Nutra and third is the

05:33 area of digital.

05:35 In that two experiments are already in the market, one is a T2C platform for diabetic

05:41 patients and the second one is digital therapeutics and adibio which has started to receive traction

05:48 from the patients who have used the product and also repurchased it.

05:54 And third digital initiative we should be getting into the market in the month of February.

06:00 So the way I look into this, these three innovative growth levers should help us to propel Dr.

06:09 Reddy's India business into the top five.

06:12 The aspiration is to bring in innovative medicine to ensure that within the existing therapeutic

06:21 areas where we have endowment, we will be able to offer a comprehensive portfolio that

06:26 covers both innovative assets and the current branded genetics.

06:32 Should there be any inorganic opportunities that come our way and make strategic sense,

06:38 makes a strategic fit for us, we will continue to look for those opportunities.

06:43 Otherwise in the coming quarters you will see India getting back into the double digit

06:50 growth.

06:51 Okay, sir.

06:52 So, sir, this would be at par with the market growth or do we have any idea where we can

06:59 outpace the market because IPM growth is somewhere between 8 to 10 percent.

07:03 So what's the target?

07:04 So if you are going to grow according to the market, I don't think we will be able to change

07:09 the rank as our aspiration is to change ranks.

07:12 The endeavor would be to beat the market.

07:15 Okay, sir.

07:17 So there is a fund infusion plan that you have in place, 650 crore which you are planning

07:22 to infuse in your subsidiary and a further infusion in the step down subsidiary.

07:29 So can you throw some light on what exactly is the plan?

07:33 What kind of CAPEX are you looking at and what are you planning to do on that front?

07:37 I mean is it going to be a product, is it going to be a new research?

07:40 What is happening?

07:43 So we are investing into Origin Oncology which is a 100 percent subsidiary of Dr. Ateez and

07:49 Origin Oncology has in turn a subsidiary which is into the CDMO business.

07:57 So this money is basically to fund for increased CAPEX both in terms of R&D as well as in manufacturing

08:07 and to some extent pay back some of the loan that the separate subsidiary of Origin had

08:14 towards Origin.

08:16 Okay, sir.

08:19 And so on the margin front, how do you view this current year?

08:24 I think you had said that we will close at around 25 percent.

08:28 So does the margin guidance stay or are we expecting to close slightly higher than the

08:32 guidance and what would be your view for FY25?

08:37 So as you know we do not provide forward guidance in terms of the margin, but whenever we have

08:43 spoken to the investors we have always said that our aspiration going forward is to look

08:50 at an EBITDA around 25 percent on multiple quarter basis.

08:58 You could have ups and downs within the quarter because we are also investing for the future.

09:06 Yes, sir.

09:09 Thank you.

09:10 Thank you so much for joining us today.

09:11 It was wonderful chatting with you as always.

09:14 Thank you.

09:15 Thank you so much.

09:16 [Music]

Dr Reddy's Laboratories Profit Up 11%, In Line With Estimates | NDTV Profit

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