Dr. Reddy's Laboratories Ltd. · NSE:DRREDDY
Dr. Reddy's Laboratories — Investor Day (June 2022)
41 slides from Dr. Reddy's Laboratories's investor day presentation, Jun 21, 2022
Slide 1: Investor Day: The Next and the New
Investor Day The Next and the New Purpose-driven | Future-ready | Sustainable 21 June 2022 © copyright Dr. Reddy’s Ltd. 2
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlying assumptions and
Slide 3: Our purpose continues to guide and energize us on our journey
Our purpose continues to guide and energize us on our journey Our credo translates into three pillars Access To serve as many patients as possible across the world Good Affordability Health operational excellence and productivity to deliver care Can’t affordably to patients Wait. Patient-centric Inn
Slide 4: Our distinctive strengths
Our distinctive strengths • Global presence in 66 countries • Strong pipeline across markets • World class expertise in R&D • Vertically Integrated Access • Agile supply chain • Robust manufacturing operations • Patient-centric innovation to • Productivity & execution address unmet needs excellence
Slide 5: Sustainability is deeply embedded in our purpose
Sustainability Sustainability is deeply embedded in our purpose and forms the core of our organization © copyright Dr. Reddy’s Ltd. 5
Slide 6: Sustainability has always been an important focus area for us
Sustainability has always been an important focus area for us First 1st Materiality assessment Delivering ‘Good Health’ Renewed our Sustainability Environmental Commitment & Going ‘beyond compliance’ sustainability Report with 6 Goals for 2020 for a sustainable future commitment 2007 2013 2020 2021
Slide 7: Our Sustainability goals
Our Sustainability goals Being committed to environmental Making our products accessible and Contributing to a fairer and more stewardship affordable for patients socially inclusive world Reducing carbon emissions Access Equity, diversity and inclusion • 100% renewable power (RE100) by 2030 • Serve
Slide 8: Our Board of directors
Our Board of directors Independent Directors Whole Time Directors Kalpana Morparia Allan Oberman Dr. Bruce LA Carter G V Prasad Satish Reddy Prasad R Menon Penny Wan Sridhar Iyengar Dr. K P Krishnan Leo Puri Shikha Sharma © copyright Dr. Reddy’s Ltd. 8
Slide 9: Strong Leadership Team
Strong Leadership Team EREZ ISRAELI M V RAMANA PARAG ARCHANA Chief Executive Chief Executive AGARWAL BHASKAR Officer Officer, Branded Chief Financial Chief Human Markets (India and Officer Resource Officer Emerging Markets) SANJAY SHARMA DEEPAK MARC JAYANTH Global Head of SAPRA KIKUCHI SRIDHAR Manuf
Slide 10: Our Strategy
Our Strategy © copyright Dr. Reddy’s Ltd. 10
Slide 11: We are delivering the promises we made in 2019
We are delivering the promises we made in 2019 We have delivering double digit Capital Reallocation increased growth* with opportunities healthy cash flow, and Leveraging portfolio across markets no debt, reduced risks and through EBITDA & ROCE^ of 24% Continuous Focus on achieving increasing produc
Slide 12: The context around us is changing
The context around us is changing Intense competition in More complex, Injectables Patients looking for traditional Generics and Biologics holistic solutions New players in the Disruption Geopolitics Macroeconomics Health ecosystem through Digital © copyright Dr. Reddy’s Ltd. 12
Slide 13: Our strategy is in alignment with the opportunities and trends
Our strategy is in alignment with the opportunities and trends 3X → 1.5Bn+ patients Our Focus Growing the core Building the future Horizon 1 Horizon 2 Our Execution Priorities Leadership in chosen spaces Operational Excellence Patient focused & Continuous Innovation Improvement Sustainability © copy
Slide 14: We continue to progress on our journey in two horizons
We continue to progress on our journey in two horizons… Horizon 1 – Growing the core Horizon 2 – Building the future Disease Branded Immuno- Management CDMO Generics Generics oncology (small and API NCEs large mol.) Nutraceuticals Biosimilars OTC Biologics Digital and CGT Services D2C (drivers in sh
Slide 15: …to deliver our future
Growth …to deliver our future Serving 1.5Bn+ patients (3X from current baseline) aspiration Double digit revenue growth Returns 25% EBITDA and 25% ROCE Sustainability Be a leader © copyright Dr. Reddy’s Ltd. 15
Slide 16: Execution driven by three pillars: Market Leadership, Productivity and Innovation
With patient at the center, our execution is driven by three pillars of Market Leadership, Productivity and Innovation • Focus on ‘products that matter’ o Economy of Scale, Complex, Brands and Clinically differentiated products Leadership in chosen spaces To Serve 1.5Bn+ • Digital and Automation pat
Slide 17: Market Leadership
Market Leadership © copyright Dr. Reddy’s Ltd. 17
Slide 18: North America – consistent growth in the last 3 years
North America – consistent growth in the last 10 out of 12 quarters Growth despite price erosion Win in products Win in channels Strong Portfolio CAGR: 5% Product Vol. mkt. share 60% products Retail are ranked 1-3 335+ products Revenue ($ Mn) gSuboxone 19% of which Icosapent Ethyl 12% 55% products C
Slide 19: North America – Robust pipeline of 175+ products
North America – Robust pipeline of 175+ products , 90 of them filed ~40% Injectables/ Sterile products Select products Complex Gx Biosimilars Semaglutide Pegfilgrastim# Teriparatide Rituximab# 25+ complex products across Drug-device combos, peptides, long-acting Injectables & RTUs Octreotide Tociliz
Slide 20: Europe – 2X in the last three years
Europe – 2X in the last three years Continuous Growth; Rapid expansion Strong pipeline*of biosimilars and generics Select products CAGR: 26% Expansion into 5 Revenue (Mn €) 5 new countries in Biosimilars Complex Generics Other Generics the last year • Pegfilgrastim# • Liraglutide • Apixaban • Rituxi
Slide 21: India ~2X in the last four years; Continues to outperform IPM
India ~2X in the last four years; Continues to outperform IPM Market beating growth… …with big brands Driving outcomes strongly …towards aspiration CAGR: 17*% MAT as per Revenue (INR Bn) Brand IPM (₹ Cr) Brands in IPM Top 16 OMEZ & OMEZ D 389 300 ZEDEX & BRO-ZEDEX 305 5 42 ATARAX 162 15 Brands with
Slide 22: Emerging Markets – 2X in the last four years
Emerging Markets – 2X in the last four years Fastest among Indian peers … …driven by market expansion …excellence in S&M and a strong portfolio CAGR: 16*% Revenue (INR Bn) 13 new markets in last 5 11 Brands with >100Cr+ 13 years 46 29 Serving patients in 33 33 564 Filings in last 4 years countries F
Slide 23: Our API business is…
Our API business is… 1 API Develop, manufacture and sell APIs to customers globally A Essential for our Aim to backward-integrate 70%+ core molecules resulting in +500 bps gross margin improvement in next 5 years competitive advantage 225+ active DMFs, 55+ products in pipeline 2 API+ Key to leveragi
Slide 24: Biologics - scaling-up Biosimilars, building CGT and CDMO
Biologics - We are scaling-up to build a global Biosimilars business in Horizon-1 and CGT and CDMO in Horizon-2 ❑ We are building a Global biosimilars business with Highly Regulated Market Approvals • Scaling-up current Biosimilars PEG-GCSF#: already approved in Europe and in advanced stages of revi
Slide 25: Productivity
Productivity © copyright Dr. Reddy’s Ltd. 25
Slide 26: Our aspiration is to be the most efficient pharma operations in the world
Our aspiration is to be the most efficient pharma operations in the world Productivity to us is to be first-to-market, have lowest cost, deliver best customer service & always be beyond compliance. The key enablers are: ‒ Integrated Product Strategy to align global market opportunities & drive seaml
Slide 27: Step change in operational productivity in the last 4 years
We have demonstrated step change in operational productivity in the last 4 years Metric Improvement (FY18 vs FY22) Opex productivity FY22 ‒ API operations1 35% (opex as a % of sales) FY18 Aspiration FY22 ‒ Formulations OSD operations2 39% ($/’000 units) FY18 Aspiration FY22 ‒ Sterile operations2 83%
Slide 28: From Top Quartile to Top Decile: Deploying 40+ Industry 4.0 use cases
From Top Quartile to Top Decile: Deploying 40+ industry 4.0 use cases in our largest plant 2 Digital Twins 2 use cases Digital twin for manufacturing New operator training & quality testing and remote assistance for method transfer Digital AR/VR 14 use cases Twin 15 use cases Decision-making based o
Slide 29: Our digital transformation has improved speed and output
Our digital transformation1 has improved speed, reduced people workload, removed redundant steps & delivered more output Category Impact (2017-2021) Cost 43% reduction in manufacturing cost per 1000 pills 27% of total export shifted from air to sea mode of transport Productivity 56% increase in fact
Slide 30: Driving productivity in sales & marketing using Digital & Analytics
We are driving productivity in sales & marketing using Digital & Analytics Non-linear growth by making S&M spends work harder Convert S&M Operating “Spends” to “Investments” Expanded Being the Deeper Geo/ Customer Engagement & Share of wallet Distribution Building Mega- indications & ‘Partner’ of in
Slide 31: Innovation
Innovation © copyright Dr. Reddy’s Ltd. 31
Slide 32: The Industry is facing a shift and we are investing to lead
The Industry is facing a shift and we are investing to lead Our Approach: Anchored in Fulfills an Meaningful End-to-End Right to Win our Purpose unmet need opportunity disease thinking Horizon 2 areas Scaling-up New spaces Immuno-oncology Nutraceuticals Differentiated Preventive & Primary NCEs Formu
Slide 33: Scaling-up: projects across different stages
We are evaluating spaces through our Innovation unit; Projects across different stages Current Developments Our Aspiration Immuno- 25+ programs - Global Oncology Biotech oncology Internal, partnership & in-licensing franchisee NCEs 6 in clinical trial; 7 in IND filing stage Scaling-up 3 of top 5 inn
Slide 34: New Spaces: projects across different stages
We are evaluating spaces through our Innovation unit; Projects across different stages Current Developments Our Aspiration Successful pilot in 7 cities; Leading Primary care & condition SVAAS 25K lives management services platform Differentiated Multiple products in Develop clinically-differentiated
Slide 35: Financials
Financials © copyright Dr. Reddy’s Ltd. 35
Slide 36: We have a strong balance sheet to invest in future growth
We have a strong balance sheet to invest in future growth Net cash surplus of Rs. 1,500+ Cr* Low financial risk in a volatile environment Consistent annual cash generation of Rs. 2,000+ Cr** Opportunities to drive inorganic growth Strong Credit Rating * as on 31st March' 2022 ** before acquisitions
Slide 37: Leverage Horizon 1 growth levers and drive productivity to invest in Horizon 2
We will leverage Horizon 1 growth levers and drive productivity to invest in Horizon 2 spaces Our medium-term aspiration Double-digit sales growth H1 growth levers Double-digit sales growth Double digit sales growth Maintain A virtuous Productivity growth cycle of EBITDA 25% momentum Operating lever
Slide 38: Creating the future while navigating near-term challenges
We will focus on creating the future while navigating industry-wide near-term challenges Inflationary environment There may be near- term volatility, however, our Demand volatility strategy will drive long-term value creation for all Continued price erosion stakeholders Geopolitical uncertainties ©
Slide 39: Disciplined capital allocation approach
We will continue to follow a disciplined capital allocation approach Allocate Capital to Utilize cash for growth Funding R&D and Capex for Horizon 1 businesses Maximize Growth Scale up Biosimilars, NCE & CDMO Optimize Financial Risk Develop new business models for Horizon 2 Create Sustainable Value
Slide 40: In summary, we are…
In summary, we are… …a diversified pharma company with strong broad-based growth 1 levers 2 …creating new (Horizon 2) business models while growing in existing (Horizon 1) spaces to drive sustainable growth for all stakeholders 3 …supplementing growth with value accretive inorganic moves …on a produ
Slide 41: Thank You
Thank You