'Overweight' on Bicon, base business getting better: Morgan Stanley

Dec 23 2013, 09:57 IST
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SummaryProgression in biosimilar portfolio for global markets

capex for dedicated Malaysian facility, partnership with significant global generic player (Mylan) …although these positive factors also imply challenges:

o Monetising biosimilar assets – These include clinical trials, regulatory approval, manufacturing scale-up and market acceptance. First EU filing (human insulin) in 2015.

o Base business is in large part API sales to institutional customers (i.e., limited retail branding) which carry risk of sudden loss of sales and/or margins.

Key downside risks to our price target include: Delays in development and regulatory approvals—especially human insulin and analogs for EU, and biosimilars in India and EM; litigation risk on pen devices; and failure of lead compounds in the proprietary pipeline. Manufacturing scale-up market access in EU for biosimilars are other credible. Slowdown in RoW sales of insulin and immunosuppressants is the key risk to earnings, in our view.

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