Earnings Review
One-time income lifts Biocon's Apr-Jun consol PAT
This story was originally published at 22:37 IST on 8 August 2024
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--Biocon: One-time income of 320 mln rupees in Apr-Jun
--Biocon Apr-Jun consol other income 11.35 bln rupees vs 935 mln
--Biocon Apr-Jun consol revenue 34.33 bln rupees vs 34.23 bln
--Biocon Apr-Jun consol net profit 6.60 bln rupees vs 1.01 bln
--Analysts saw Biocon Apr-Jun consol net profit 1.71 bln rupees
--Biocon Apr-Jun consol net profit 6.60 bln rupees
By Apoorva Choubey
MUMBAI – A one-time gain from a strategic formulations deal with Eris LifeSciences Ltd and higher revenue contribution from the biologics business helped Biocon Ltd post better-than-expected earnings for the June quarter. The drugmaker's consolidated net profit jumped over sixfold on year to 6.6 bln rupees for Apr-Jun, surpassing the Street's estimate of 1.71 bln rupees.
During the June quarter, the company reported other income of 11.35 bln rupees compared with 935 mln rupees for the same quarter last year. The other income for Apr-Jun included 10.6 bln rupees of exceptional gains from the agreement between Eris Lifesciences and the company's biosimilars arm, Biocon Biologics, which was signed in March.
Eris Lifesciences had said it is acquiring Biocon's insulin, critical care, and oncology portfolios for 12.42 bln rupees. During the June quarter, the one-time income and strong performance of the largest vertical of biologics helped offset the weakness in the drugmaker's generic and research services divisions.
Biocon's consolidated revenue from operations rose 0.3% on year to 34.33 bln rupees during the June quarter, missing expectations of 39.21 bln rupees. The Bengaluru-based company's net sales fell 12.4% on quarter, while the net profit rose over fourfold.
The drugmaker's consolidated operating profit surged 117% on year to 17.6 bln rupees for the reporting quarter. However, the core earnings before interest, taxes, depreciation and amortisation, or EBITDA, fell 4% to 9.03 bln rupees.
This profit excludes proceeds from the Eris transaction, research and development costs, foreign exchange-related loss, licensing income, gain from fund infusion into Bicara Therapeutics and derivative mark-to-market losses/gains, the company said. The company's core operating margin fell to 26% during the June quarter from 28% a year ago, according to a press release.
Total expenditure, including finance cost, rose 4.7% on year to 34.54 bln rupees for Apr-Jun. Finance costs were 2.36 bln rupees, as against 2.33 bln rupees a year ago.
The company also recorded a one-time gain of 320 mln rupees during the quarter as insurance claim for a fire incident at a unit in 2016. Biocon's tax outgo for the June quarter was 2.84 bln rupees as against 348 mln rupees a year ago.
"The outlook for this fiscal remains positive as we anticipate stronger growth in H2FY25 (Oct-Mar), with new product launches in the biosimilars and generics businesses, including Liraglutide for diabetes and obesity in the UK and other markets," Kiran Mazumdar-Shaw, the company's executive chairperson, said in the release. Additionally, Biocon expects better business prospects for the research services arm, Syngene International Ltd, supported by a resurgent biotech funding environment in the US.
SEGMENTS
For the June quarter, Biocon Biologics saw sales rise 3% on year to 20.8 bln rupees, owing to market share gains across key products, such as trastuzumab and insulin glargine. The unit contributes 59% to the company's total revenue. On a like-for-like basis, the segment's revenue grew 11%, the company said.
The company's generic business witnessed revenues fall 6% on year to 6.59 bln rupees, due to pricing pressures and subdued demand. Analysts had expected the segment to report single-digit growth. The generics division makes up 19% of the total sales pie.
The third division, research services, which is housed under Syngene International Ltd, accounts for around 22% of the revenue. The unit had already reported a fall in earnings for the June quarter earlier this month. Syngene's consolidated net profit for Apr-Jun fell 19% on year to 757 mln rupees, and consolidated revenue from operations declined 2.3% to 7.90 bln rupees.
The steady growth in Syngene's biologics manufacturing and dedicated centres segments was not enough to offset the weakness in the company's overall discovery services vertical. A weak funding backdrop for US-based biotechnology companies has been hurting Syngene's discovery services segment for more than two years now, but the company has alluded to early signs of recovery in the subdued funding environment.
The company declared its earnings after market hours. Today, shares of Biocon closed 2.2% lower at 339.15 rupees on the National Stock Exchange. End
US$1 = 83.96 rupees
Edited by Tanima Banerjee
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