#145.02 675.45 684.8 421,22 9512 363.2 452.3 763.2 799 215 14.22 489.54 65.02 45692.35 123.25 333.44 Duelonic FL 3 NOTA-2 NALE NO CI FUNDUSZ 1.2.yuu cha 2.2 tytułu instrumentbw p Z tytułu wydanych cen Dr. Reddy's Laboratories Limited Hyderabad, India BSE: 500124 | NSE: DRREDDY | NYSE: RDY Investor Presentation August 2019 Dr. Reddy's#2Safe 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 other statements that are other than statements of historical fact, including, but not limited to, those that are identified by the use of words such as "anticipates", "believes", "estimates", "expects", "intends", "plans”, “predicts", "projects" and similar expressions. Risks and uncertainties that could affect us include, without limitation: General economic and business conditions in India and other key global markets in which we operate; The ability to successfully implement our strategy, our research and development efforts, growth & expansion plans and technological changes; • Changes in the value of the Rupee and other currency changes; • Changes in the Indian and international interest rates; • Allocations of funds by the Governments in our key global markets; • Changes in laws and regulations that apply to our customers, suppliers, and the pharmaceutical industry; • Increasing competition in and the conditions of our customers, suppliers and the pharmaceutical industry; and • Changes in political conditions in India and in our key global markets. Should one or more of such risks and uncertainties materialize, or should any underlying assumption prove incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking statements. For more detailed information on the risks and uncertainties associated with the Company's business activities, please see the company's annual report filed in Form 20-F with the US SEC for the fiscal year ended March 31, 2019, quarterly financial statements filed in Form 6-K with the US SEC for the quarters ended September 30, 2018, December 31, 2018 and June 30, 2019, and our other filings with US SEC. Any forward-looking statement or information contained in this presentation speaks only as of the date of the statement. We are not required to update any such statement or information to either reflect events or circumstances that occur after the date the statement or information is made or to account for unanticipated events. PROPRIETARY#3More than ever people across the world need access to affordable healthcare Our purpose and promises remain relevant to achieve this need PURPOSE OUR PROMISES We accelerate access to affordable medicines because Good Health Can't Wait. Bringing expensive medicine within reach Addressing unmet patient needs Helping patients manage disease better Enabling and helping our partners ensure our medicines are available where needed Working with partners to help them succeed PROPRIETARY#4We believe that the changes in market dynamics have created exciting opportunities. We have what it takes to win in the generics industry Strong R&D, API, complex generics, biologics, specialty (1200+ scientists, 350+ PhDs) 00 Low cost operations Broad portfolio - Differentiated, complex, back integrated Six spaces set up for growth (US, China, Russia, India, API, Hospitals) Commitment to operational excellence, safety, and compliance Stable ownership and strong management team with dedicated employees .00 Strong balance Quality sheet Strong brand identity Customers & stakeholders orientation (Customers, Regulators, Vendors, Partners) PROPRIETARY#5We have improved our business performance in last few years... SALES: 2 year CAGR of 5% EBITDA: 2 year CAGR of 16% INR Cr. 15,385 14,081 14,203 3,419 1,973 1,468 1,424 2,414 2,128 2,199 2,549 2,408 31% 4,420 4,598 5,507 36% 18.1% 17.0% 22.2% 45% 6,360 5,982 39% 5,996 FY17 FY18 FY19 NAG India + EM PSAI Others Dr. Reddy's We have well diversified revenue streams between generics and branded generic markets. FY17 FY18 FY19 ■ EBITDA % to Sales EBITDA margins improving due to optimization of cost and growth in emerging markets PROPRIETARY#6...We are controlling our spend and capex while we remain with a strong balance sheet and are focusing on improving profitability ... Gross margin holding up despite continuing price erosion in the US Spend optimization initiatives & improved productivity INR Cr. 6,592 6,517 6,450 55.6% FY17 53.7% 54.2% Gross Margin as a % to sales FY18 Moderation seen in capital expenditure FY19 4,637 4,691 4,889 1,955 1,826 1,561 FY17 FY18 FY19 R&D SG&A SG&A + R&D Headroom available for borrowing FY17 FY18 FY19 Mar-17 Mar-18 Mar-19 Capital Expenditure 1,228 925 696 Net Debt to Equity 0.25 0.24 0.09 PROPRIETARY#7We continued on our improvement journey in Q1 FY 20 Revenues EBIDTA* Free Cash Flow INR 3,844 Cr INR 1,134 Cr INR 850 Cr (YoY growth: 3%) PBT * INR 850 Cr (YoY growth: 70%) (% of Sales: 29.5%) R&D Expenses INR 361 Cr (% of Sales: 9.4%) Net Debt/Equity 0.04 * Includes Rs. 346 cr received from Celgene towards settlement of any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company's ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada PROPRIETARY#8Recent Updates - YTD FY 20 United States Launched 10 products including some complex and First-to-market Assets like Daptomycin Inj, Carboprost Inj, Vitamin K Inj, OTC Guaifenesin Pseudoephedrine and re-launch of Isotretinoin gCopaxone and g Nuvaring: received Complete Response Letter from USFDA; preparing for response India Growth faster than the overall market [Dr. Reddy's growth of 13.0% vs market growth of 10.4%] *As per IQVIA MAT June' 2019 Proprietary Products Canada Received $ 50 million as settlement towards Section 8 damages for Lenalidomide Out licenced ZEMBRACE® SYMTOUCH® (Sumatriptan injection) 3 mg and TOSYMRATM (Sumatriptan nasal spray) 10 mg, for U.S. $ 110.5 million as upfront consideration / near term milestones, and future sales based royalties. Successful completion of Phase 2B studies for PPC-06 (XP - 23829) 8 PROPRIETARY#9Our Focus continues to be on: 1 Delivering high growth in emerging markets 2 Enhancing customer service 3 Launching new products in US and other markets and continue to build a healthy pipeline Improving efficiency and cost controls, 4 elimination of waste 5 Divesting non strategic assets and brands 6 Improving internal processes 7 Engaging with USFDA to resolve outstanding concerns and focus on quality#10Our Quality Journey We are committed to excellence in quality and being best in class U.S. FDA Audit Updates Sites Previously on Warning Letter CTO 6: Submitted all compliance responses; Awaiting re-inspection FTO 7 Sterile Plant: Received EIR, status changed to VAI Update on recently audited sites CTO 2: Received Form 483 with 5 observations pam-pac Sites in receipt of EIR & considered compliant FTO 3 FTO-PU 1 FTO-PU 2 Shreveport CTO - 1 CTO -3 CTO-5 CTO - SEZ Mexico Mirfield CPS - TDC In addition, our sites have been approved by regulators from ~20 countries 33333333 23242 3333 core rece Occre PROPRIETARY#11Six spaces which will drive significant growth 1 US Generics 107 products pending approval in US* Ramp-up in New launches Providing great customer service We have a healthy pipeline of First-to-market, complex Products NUMBER OF PENDING FILINGS* BY DOSAGE FORM Topical/ Transdermal/ Inhalation, 1 Softgel, 2 Complex Inj/ Sterile, 19 Vaginal, 8 OSD, 41 10 products launched in the US during the FY 20 so far • PIPELINE HIGHLIGHTS 104 pending ANDAs & 3 pending NDAS [505(b)(2)s] No incl. 58 para-IV and we believe 34 have first to file status Injectable, 15 Complex OSD, 21 Filings as of June 30, 2019 Fast-following on potential OTC switches PROPRIETARY#12Six spaces which will drive significant growth 2 China We are looking for sustainable high growth in Chinal Many of our US products meet the new Chinese requirements High CAGR in China 24% CAGR 129 100 84 FY17 FY18 Revenues ($ Mn) FY19 What are we going to do in China? Select and launch products that meet local requirements Scale up local manufacturing Scale up partnerships in identified therapy areas 2 We have been present in China for 20 years Established credentials with Regulatory agencies Local Manufacturing experience Familiarity with commercialization in all provinces of China 1- Includes JV Revenue PROPRIETARY#13Six spaces which will drive significant growth 3 4 Russia India 5 ΑΡΙ ●Focus on mega brands •Focus on leveraging Dr. Reddy's brand ●Develop and launch clinically differentiated products Partner of choice for global generics manufacturers effectively ⚫Global Leadership through cost, service and back integration 6 Global Hospitals incl. Biologics Leverage portfolio to reach high number of patients Build sustainable business and financial model to fund biosimilars PROPRIETARY#14Key Strategic Priorities Focus on execution in the short term... Focus on profitable growth and shareholder returns Growth in all markets and launch new products Improve efficiencies and our cost structure Focus on compliance and quality ENCIRMS PROPRIETARY#15Key Strategic Priorities ...And ensure growth in the long term Continue to build our global portfolio ✓ Divest non strategic assets Strengthen our positioning with organic and inorganic moves ✓ Selective inorganic moves to complement our capabilities Build strong leadership teams and enhance our internal processes 00000 PROPRIETARY#16Dr.Reddy's Thank you