Biocon reported a healthy topline and bottomline during the April-June quarter, with its largest business segment biosimilars seeing a strong growth. However, the generics business faced significant pressure from pricing challenges and demand contraction. Siddharth Mittal, CEO & managing director, Biocon, discusses with FE how the company is focusing on launching new products and establishing strategic partnerships. Excerpts:
Given the pressure on your generics business, what plans do you have to return this business to the growth path?
The generics business has of late faced pricing pressure and demand contraction, affecting our performance in APIs and generic formulations. We expect to overcome the current pressure on the generics business starting in the second half of this fiscal when we will start commercialising the products for which we have received approvals, such as Liraglutide in the UK. Besides launching new products, we also continue to accelerate our cost improvement initiatives and expedite ongoing capex projects. We made 17 market filings across global markets, which augur well for our future growth prospects.
The generic formulations business crossed the $100-million threshold in 2024. How do you see the business performing in FY25?
In the generic formulations business, most of our commercialised products have reported good market shares and we will continue to maintain these. We expect our growth in FY25 to be driven by the European market on account of the upcoming Liraglutide launch in the UK in the second half. In the US, business is expected to be stable. For the Most of the World markets, we continue our business development efforts to lock in our portfolio with strong strategic local players in line with our regional expansion plans. We expect these markets to contribute to growth in the next 1-2 years.
Your April-June quarter R&D investments were lower on a year-on-year basis. How much do you expect to spend on R&D in full year FY25?
We prioritise strategic investments in research and development (R&D) to advance and build a highly competitive product pipeline. Net R&D investments for Q1FY25 were down 28% y-o-y at Rs 228 crore, representing 10% of Biocon revenues (ex-Syngene). For generics, the spend was Rs 64 crore (10% of generic segment revenues), while we spent Rs 166 crore in biosimilars (8% of biosimilar segment revenues). For FY25, R&D investments are expected to be around 8-9% of revenues, both for generics as well as for biosimilars. In the generics business, we will continue to invest and expand our portfolio of complex vertically integrated products. In biosimilars, we will carry on our investments in advancing our pipeline of 12 biosimilars.
What is Biocon’s road map for deleveraging its balance sheet?
The consolidated net debt on Biocon’s balance sheet is $1.1 billion. Reduction in debt is a continued focus and a key priority for the company’s management. Biocon is considering fundraising options that should help lower the debt. During FY24, Biocon Biologics prepaid $250 million out of the acquisition consortium debt of $1.2 billion.
