Biocon Biologics intends to list on capital markets in next 2-3 years: CFO Chinappa MB

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August 3, 2020 4:40 AM

Five molecules from Biocon Biologics’ portfolio have been taken from lab to market, of which three have been commercialised in developed markets like EU, Australia, US, Canada and Japan.

Five molecules from Biocon Biologics’ portfolio have been taken from lab to market, of which three have been commercialised in developed markets like EU, Australia, US, Canada and Japan.

Setting a milestone of $1-billion revenue by FY22, Biocon Biologics India, a subsidiary of Biocon, plans to raise funds in the $200-$300 million range over the next six months to increase its R&D portfolio and manufacturing. The demand for biosimilars in most of the world (MoW) markets is rapidly increasing which augurs well for its revenue growth prospects in FY21. It has one of the largest biosimilars’ portfolios which includes 28 biosimilar molecules across diabetes, oncology, immunology, etc. In an interaction, Chinappa MB, chief financial officer, Biocon Biologics, tells BV Mahalakshmi that the company plans to invest $200 million per year in capex for FY21 and FY22 to support capex and R&D requirements. Edited excerpts:

How is the biosimilar business picking up momentum and what are your plans to unlock value through equity investments?

Being a global biosimilars player with two products commercialised in the US, the launch of the third biosimilar is on the anvil. The equity infusion is the next step in our journey of unlocking value. Through prudent investments in R&D and high-quality manufacturing infrastructure, we are confident of achieving our aspiration of serving five million patients through our biosimilars portfolio and achieving a target revenue of $1 billion in FY22. Five molecules from Biocon Biologics’ portfolio have been taken from lab to market, of which three have been commercialised in developed markets like EU, Australia, US, Canada and Japan.

How do you plan to utilise the $30 million raised via the PE deal with Tata Capital? Do you have plans to raise more funds?

We have raised $105 million so far this calendar year through two primary equity infusions. Through the latest round of primary equity investment by Tata Capital Growth Fund, we are raising $30 million for a 0.85% minority stake in the biosimilar business. Earlier this year in January, we had raised $75 million as primary equity infusion by True North Fund for a 2.44% stake in the business. The latest round of equity infusion is at a pre-money equity valuation of $3.5 billion, representing a 22% increase in valuation compared to the last round and 44% increase on an annualised basis. As indicated last year, our total fund raising plans are in the range of $200-$300 million. We expect to complete the balance fundraising over the next six months.

There are reports that Biocon is planning to list Biocon Biologics in the next two-three years. Can you provide more clarity on the IPO timeline?

We intend to list Biocon Biologics on the Indian capital markets in the next two to three years. However, it would be early to comment on specific IPO timelines as it is dependent on business performance and market conditions. As and when we are ready to approach the capital markets for an IPO, we will keep our shareholders informed on the timing and the potential size of the IPO offering.

How much is the capex lined up and how is it being funded?

Biocon Biologics has plans to invest $200 million per year in capex for FY21 and FY22. This unlocking of value through PE funding will enable us to fund capex investments for further strengthening our business. Additionally, as the biosimilars business scales up and generates good margins that will also generate operating cash to fund our investment objectives.

Having the largest portfolio of biosimilars, what’s the outlook for FY21?

In Q1FY21, our biosimilars business revenue rose 19% y-o-y to Rs 692 crore. Sequentially, revenues rose 60% exhibiting a strong recovery from Q4FY20. We are very confident that the biosimilars business will demonstrate strong growth in FY21 on the back of significant contribution from Semglee, a biosimilar Insulin Glargine. The imminent launch of Semglee in the US by our partner, Mylan, will allow us to tap into a $2.2-billion Glargine market opportunity. We also expect a full year of revenue from sales of Ogivri (biosimilar Trastuzumab) in the US to contribute to the annual performance. Sales of Fulphila (biosimilar Pegfilgrastim) are also expected to improve, backed by recently expanded drug substance capacity. Mylan had launched Fulphila in the US in 2018 and recently launched the product in other developed markets, such as a few countries in Europe. We also expect Mylan to commercialise biosimilar Etanercept in Europe in the second half of this calendar year. For Etanercept, Biocon Biologics has shared economics.

Having provided over two billion doses of human insulin worldwide, your views on digital therapeutic solutions to improve patient outcomes and reduce costs to healthcare systems?

Earlier this month, we announced a global collaboration with Voluntis, a leader in digital therapeutics, to develop and distribute innovative digital therapeutics supporting people with diabetes on biologics therapy. This makes Biocon Biologics one of the first insulin companies to offer a USFDA-cleared and CE-marked, highly validated digital therapeutic product, Insulia, to Type-2 diabetes patients, across several markets in the world.

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