Biocon Q2 net flat at Rs 102 crore

Written by fe Bureau | Bangalore | Updated: Oct 23 2014, 07:24am hrs
Biocon on Wednesday reported a flat net profit at R102 crore failing to meet Street expectations for the September quarter compared to the year-ago period, owing to muted growth in its core biopharma business, which is facing capacity constraints. The biopharma major was also hit hard by a continuing credit risk challenge in what the company terms as the Middle East and North Africa (MENA) region. Sequentially, net profit declined by 1% from R103 crore.

The biotechnology firm reported a 3% year-on-year increase in total revenue at R773 crore compared to R753 crore in the year-ago period. Revenue was up 4% sequentially from R742 crore. Revenue from biopharma, Biocons largest business segment, declined by 1% to R442 crore compared to a year earlier while the India-focussed branded formulations business grew 17% to contribute R116 crore. In the MENA region, the company is facing a credit risk on payments as the Export Credit Guarantee Corporation of India cover is not easily available because of the geo-political situation.

However, we are actively engaged for entry into new markets to mitigate the risk associated with this MENA region. Despite the muted growth, we have seen sequential growth and we have maintained our Ebitda margin at 24% and profit-after-tax margin at 13%, CMD Kiran Mazumdar-Shaw said, adding the company was able to maintain its profit level on growth in the branded formulations business and the research services segment whose revenue grew 2% to R192 crore.

As far as our research services business is concerned, the strong order book we have augurs well for a strong second-half performance, she said. Last month, Biocon had sold a 10% stake in its research services arm Syngene International for R380 crore to Silver Leaf Oak (Mauritius), an investment vehicle advised by India Value Fund Advisors. The stake purchase came a week after GE Capital exited from a 7.69% stake it held in Syngene. It also gives Syngene a higher valuation of R3,800 crore compared to around R2,800 crore at the time of GE Capitals exit on September 9.

Biocons co-development partner Mylan initiated two Phase-3 clinical trials for insulin Glargine in the US and the trials are expected to be completed by June 2016.