Bengaluru-headquartered biopharmaceutical major Biocon has announced that it is to fully integrate Biocon Biologics Limited (BBL) as a wholly owned subsidiary into Biocon Limited.
Describing it as a value-accretive proposition for investors, Kiran Mazumdar-Shaw, founder and executive chairperson of Biocon sees the move as one that would make the unified entity best placed to address end-to-end needs of patients, especially in diabetes care.
Rational behind merger
Speaking to journalists on Saturday, she began by explaining the rationale behind bringing the two businesses together and having a combined balance sheet. “The markets have always devalued our intrinsic value of both Biocon and Biocon Biologics and partly on account of the debt overhang that Biocon Biologics had because of the nature of its business, it would not have allowed us to have a very successful IPO. The debt/EBITDA has however significantly declined from 4.3 times in 2020 to 2.5 today and it will only decline further, which makes us very robust and we will have free cashflow, which will allow us to invest in a confident and strong manner and do much more in terms of bringing more products to the market.”
The combined entity will have a unique proposition in terms of the ‘diabesity’ segment. In addition to that we will combine the synergies that we have in oncology and immunology with the products we have in biosimilars and generics.”
Stake acquisition from Serum and Tata Capital
Under the proposed transaction, Biocon Limited will acquire the remaining stake in Biocon Biologics Limited from Serum Institute Life Sciences (Serum), Tata Capital Growth Fund II (Tata Capital) and Activ Pine LLP (Activ Pine) through a share swap of 70.28 Biocon shares for every 100 Biocon Biologics shares, at a share price of INR 405.78 per Biocon share; valuing Biocon Biologics Limited at USD 5.5 billion.
Further, Biocon will acquire the residual stake held by Mylan Inc. (“Viatris”) for a total consideration of USD 815 million, of which USD 400 million will be payable in cash and USD 415 million through a share swap of 61.70 Biocon shares for every 100 Biocon Biologics shares at a share price of INR 405.78 per Biocon share.
The swap ratios have been approved by the Board based on independent valuations by EY. The Board has also approved raising additional capital, of up to INR 4500 crore (USD 500 million) through Qualified Institutional Placement (QIP), subject to shareholder approval. The proceeds of the QIP will be largely utilised towards the cash component payable to Viatris.
Acquisition timeline
According to a note circulated by the company, the integration process is expected to be completed no later than March 31, 2026. The move simplifies the corporate structure of the organization and strengthens Biocon’s global position to lead in diabetes, oncology, and immunology — therapeutic areas that together account for nearly 40% of global pharmaceutical revenues. Also, as the only company operating globally with both biosimilar insulins and generic versions of complex peptides, including GLP-1s, Biocon is uniquely poised to address the rapidly expanding ‘diabesity’ market.
In terms of the governance, Siddharth Mittal and Shreehas Tambe will continue in their roles as CEO & Managing Director at Biocon Limited and Biocon Biologics Limited, respectively, until completion of the integration process.
Post-merger management
Post the integration Shreehas Tambe will take on the role of CEO & Managing Director and Kedar Upadhye the role of Chief Financial Officer of the combined business. Siddharth Mittal, CEO & Managing Director, Biocon Limited, will transition into a leadership role within the Group.
The note quotes Kiran Mazumdar-Shaw as saying: “The integration of Biocon Biologics Limited into Biocon Limited represents the next chapter in our evolution. Strategically, Biocon will be one of the few companies offering both biosimilars and generics at a global scale. As the only company with biosimilar insulins and generic GLP1 peptides, Biocon is uniquely positioned to comprehensively address the needs of patients living with diabetes. Together with our combined oncology and immunology portfolios, this creates a differentiated offering addressing the world’s most pressing healthcare needs.”