The year has seen several notable developments, of which four give me
 great satisfaction. I want to share these with you.
 
 The first is your Companys rapid presence in biosimilars. Let me briely
 explain what are biosimilars. Cloning of human genetic material coupled
 with the development of in vitro biological production systems has
 allowed the production of most recombinant DNA based biological
 substances for eventually developing tailor-made and targeted
 medicines.
 
 Recombinant therapeutic proteins are complex in nature and are made in
 living cells such as bacteria, yeast, or animal and human cell lines.
 The most well known recombinant drug is insulin, used for treating
 diabetes. The fascinating aspect of any biologic — a drug containing a
 recombinant therapeutic protein — is that it is largely determined by
 the process of production, namely the choice of the cell type, the
 development of genetically modifed cell for production, the production
 and purifcation processes, and how it is eventually formulated into a
 drug. It is a wonderful combination of science and art. Biosimilars are
 offcially approved versions of innovator biologics that have come off
 patent. Unlike the more
 commonly manufactured small-molecule drugs, biologics exhibit much
 higher molecular complexity, and are quite sensitive to manufacturing
 process changes. A biosimilar manufacturer neither has access to the
 originators molecular clone and the original cell bank; nor to the
 exact fermentation and purifcation process and the active drug
 substance. Thus, biosimilars involve the art of de- constructing how
 the innovator made the product and, having done so, how to create the
 similar through different non-patent infringing methods.
 
 Biosimilars are, therefore, not just diffcult to engineer and produce,
 but are also very important in meeting life threatening therapeutic
 needs. Not surprisingly, these are extremely valuable products.
 
 I am proud that your Company has made its mark in biosimilars, three
 years ago by launching the first MAB biosimilar in the world. Reditux™,
 the biosimilar of rituximab used in the treatment of certain lymphomas,
 leukemia and rheumatoid arthritis, has been a great success. In
 2010-11, it grew by 75% over the previous year and ranks among your
 Companys Top Five brands in India.  This year, Dr. Reddys launched
 Cresp® in India, the first generic darbepoetin alfa in the world for
 treating nephrology and oncology indications.
 
 Your Company also launched Peg-grafeelTM, an affordable form of
 pegflgrastim, which is used to stimulate the bone marrow to fght
 infection in patients undergoing chemotherapy. Your Company has sold
 some 1.4 million units of its biosimilars, which have treated almost
 97,000 patients across 12 countries.
 
 Second, I am happy with the robustness of your Companys revenues. I
 believe that it has now reached a stage in its evolution where it can
 predict a steady growth of baseline revenue, and enjoy the upsides of
 periodically successful Para IV first- to-fle launches in the USA
 either with 180-days exclusivity or as an authorized generic supplier
 to the innovator. With many innovator drugs getting off patent in the
 years to come, I hope that your Company will be able to leverage as
 many upsides as possible. Indications are that it should.
 
 Third, I am delighted to see research and development (R&D) spends
 increasing—not just absolutely but as a share of revenue. It shows up
 in the success of biosimilars. In 2010-11, your Companys investments
 in R&D grew by 33% to Rs. 5,060 millions. This represents 7% of overal
 sales, versus 5% in the previous year. We fled 21 abbreviated new drug
 applications (ANDAs) in 2010-11, taking the cumulative total to 179
 ANDAs (including partnered ANDAs). Of these, 38 are Para-IV flings,
 and among these 10 are in the category of first to fle. We have also
 fled 56 drug master fles (DMFs) in 2010-11; our cumulative record is
 486 DMFs, which makes us one of the global leaders in this category.
 
 My fourth source of satisfaction is your Companys strategic
 partnership with GlaxoSmithKline Plc (GSK) — which I had touched upon
 last year. Dr. Reddys is developing and marketing key products for GSK
 across emerging markets outside India. The products will be
 manufactured by your Company, and will be icensed and supplied to GSK
 in Latin America, Africa, the Middle East, and Asia Pacifc. In
 addition, your Company has acquired GSKs penicillin facility in
 Tennessee, USA, which will allow it to enter the US penicillin-based
 anti-bacterial market segment
 
 At Dr. Reddys, we must never forget our basic aim. It is to provide
 affordable and innovative medicines for healthier lives. We can do this
 if we forever excel in four aspects of our business O Excellence in
 science, intellectual property and R&D, because these constitute the
 DNA of any pharmaceutical enterprise worth the name O Excellence in
 anticipating what patients need — where and how — and being able to
 provide affordable variants of such medicine more often than not
 
 O Excellence in processes — quality, manufacturing, logistics, supply
 chain, marketing, customer relations and safety — to be the first to
 occupy pharmaceutical bridgeheads in various parts of the world
 
 O Excellence in financial and operating discipline, because at the end
 we can never be accountable to our patients by losing sight of our
 shareholders am confdent that your Company has all these attributes.
 Some exist in large measure. Others are being scaled up. When they all
 fre together, Dr. Reddys will be a diffcult act to beat. We
 represent an idea whose time has come. And we will deliver
 
 Thank you for your support
 
 As always, with warm regards,
 
 DR. K ANJI REDDY
 
 Chairman