More Stories

Informist, Wednesday, Oct. 30, 2024

--Biocon: Biologics business R&D spend to remain in range of 7-9% of revenues 
--Biocon: Will list Biocon Biologics only when time, other factors right 
--Biocon: IPO remains an option for Biocon Biologics 
--Biocon: Reducing debt remains a priority; looking for options 
--Biocon: Generics sales growth to be led by peptide, injectable launches 
--Biocon: Expect mid-teen sales growth in generics over next couple of years 
--Biocon: Expect Biocon Biologics EBITDA margin to stay in 22-25% range 
--Biocon: Looking to launch new biosimilars products across markets 
--Biocon: Bevacizumab launch hinges on outcome of US FDA audit at Biocon park 
--Biocon: Expect outcome of US FDA inspection at Biocon park soon 
--Biocon: Market share of Insulin portfolio at mid to high teens in US 
--Biocon: Market share of oncology-related biosimilars portfolio at 20% in US 
--CONTEXT: Biocon senior management's comments at post-earnings analyst call 
--Biocon: Liraglutide sales in UK to aid generics ops in Oct-Mar 
--Biocon: Expect recovery in generics ops in Oct-Mar led by new launches 
--Biocon: Shutdown of API facility in Jul-Sept affected generics ops sales 
--Biocon: Generics segment faced pricing pressure, demand contraction 
--Biocon: Expect recovery in generics segment in latter part of Oct-Mar 
--Biocon: Biosimilars sales growth offset decline in generics, Syngene sales 
--Biocon: Biosimilars sales driven by mkt share gain in US oncology, insulins 

MUMBAI – Biocon Ltd. has iterated its guidance of growth returning strongly in Oct-Mar, with the help of a recovery in the generics business, revival in growth of the research services unit, and sustained momentum in the biologics arm. "We maintain our outlook for a transition to accelerating growth in the second half of the fiscal year..." said Group Chief Executive Officer Peter Bains said at a conference with analysts Wednesday.

Business and operational trends are pointing in the right direction for research services arm Syngene International Ltd., robust momentum is being maintained in biosimilars, and new product launches are coming into the line of sight for the generics business, Bains said. "We are looking forward to an improved second half," he said. The ongoing cost savings initiatives will also aid earnings, he said.

Earlier on Wednesday, Biocon reported a consolidated net loss of INR 160 million for the September quarter against a net profit of INR 1.26 billion a year ago. The net loss for the quarter was on account of higher tax, based on geographical split of profits and minority interest.

The company's revenue for the quarter increased 3.7% on year to INR 35.90 billion. For Apr-Sept, Biocon reported a 2% rise in net sales to INR 70.2 billion while consolidated net profit surged nearly 184% on year to INR 6.4 billion.

Hereon, Biocon will continue to focus on reducing overall debt at the group level, as well as resolution of regulatory issues at the manufacturing facilities in Malaysia and Bengaluru. "Our priority is working with the (US) FDA to address their observations at our Bengaluru and Malaysia facilities, which would pave the way for several new launches in the US in the near term," Bains said.

When it comes to debt, the company has assured investors again that it will reduce liabilities. The current debt stands at $1.4 billion. "I think you can expect to see us take action before the end of the fiscal but will determine you know which instrument we use," Managing Director Siddharth Mittal said.

GENERICS, RESEARCH

Biocon expects sales growth of its generics drugs segment to recover during Oct-Mar, led by new launches, especially the commercialisation of Liraglutide in the UK. Over the next couple of years too, the new launches are expected to drive strong growth in mid-teens, Mittal said. The new launches are likely in the areas of peptides and injectables, as per the current pipeline. 

The generics segment accounts for 17% of the company's overall sales. For Jul-Sept, revenue from this vertical fell 8% on year to INR 6.24 billion, due to the impact of pricing pressures, subdued demand, and shutdown of a bulk drug facility during the quarter. 

The launch of Liraglutide in the US will depend on when the Food and Drug Administration approves the new drug application, Biocon said. This product was also filed from the Biocon Biologics Ltd. injectable facility for which the company is awaiting the outcome of a recent inspection and classification. "We expect the approval for the drug sometime in the next calendar year," Mittal said. 

The revenue from the research services division, which contributed about 24% to the total revenue, fell 2% on year to INR 8.91 billion. Syngene International Ltd. remains on track to deliver its guidance range for the full year. Syngene had guided for revenue growth of high single digit to low double digits for 2024-25 (Apr-Mar), on hope of some recovery in demand from the US biotech industry in the second half of the year and pilot projects from global players looking to reduce dependence on China.   

BIOSIMILARS

The drugmaker expects momentum in the biosimilars business to continue, with new product launches and market share gains in advanced driving profitability. The earnings before interest, taxes, depreciation and amortisation margin is seen in the range of 22-25%. It was 21% for Jul-Sept, compared with 23% a year ago. 

Biocon Biologics, which houses the biosimilar business, accounts for 59% of the total revenue. The segment reported an 11% on-year growth in revenue during the quarter to INR 21.82 billion, driven by strong market share gains in the US oncology and insulin franchises.

North America accounts for 20% of Biocon Biologics' revenue, while 30% comes from Europe and emerging markets each. The market share of its insulin portfolio in the high value market of US is mid to high teens while the market share of oncology-related biosimilars portfolio is 20%.

The company is now looking to launch new biosimilars products across markets, but will have five new targetted launches over the near-to-medium term. Key launches such as Aspart and Bevacizumab hinge on the outcome of US FDA audit at its facility in Biocon park, Bengaluru and Malaysia. The company expects to hear from the agency soon. 

The outlook for pricing of biosimilars is stable. "I believe within the next 12 months you'll see some settling of the pricing but as you know, this is a competitive market and Biocon is well positioned to continue to compete," Shreehas Tambe, managing director and chief executive officer of Biocon Biologics, said.

The research and development spending for the biologics business is likely to remain in the range of 7-9% of revenue, the company said. For Jul-Sept, the R&D investment of Biocon Biologics was INR 1.4 billion, or 6% of sales. 

The initial public offering of Biocon Biologics remains an option, Bains said, while speaking about avenues of debt reduction. Biocon Biologics has a debt of $1.27 billion. However, Biocon will only list Biocon Biologics when the time is right and other factors, such as market sentiment, etc., are right, he said.

Wednesday, shares of Biocon ended 2% lower at INR 320.70 on the National Stock Exchange. The company announced the earnings after market hours.  End

US$1 = INR 84.07

Reported by Apoorva Choubey and Ayushman Mishra 

Edited by Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.