With two mega deals — one with Viatris and the other with Serum Institute Life Sciences — under its belt, Biocon Biologics, a subsidiary of the innovation-led biopharmaceutical company Biocon, will capture the full quarter’s financial contribution from Viatris’ biosimilars business starting Q4FY23, when revenues are expected to touch Rs 2,000 crore, executive chairperson Kiran Mazumdar Shaw tells Tushar Goenka. Excerpts:
You closed the acquisition deal of Viatris’ global biosimilars business in November. What’s the next step now?
The acquisition of the global biosimilars business of our long-term partner Viatris for over $3 billion in cash and stock is one of the biggest M&A deals in the Indian pharma space, and a historic inflection point in Biocon Biologics’ value-creation journey. Through this acquisition, Biocon Biologics will gain direct commercial capabilities and supporting infrastructure in the advanced markets and several emerging markets. We have drawn up a comprehensive plan to integrate the acquired business into Biocon Biologics. It includes the scheduled migration of business operations in a phased manner to ensure business continuity and uninterrupted service to customers and patients. We have plans for country-wise migration to optimise revenues and profitability, creating value for all stakeholders.
Is Biocon Biologics on track to achieve its post-deal revenue projection of $1 billion by FY24?
Post the deal close, Biocon Biologics has started recognising the full revenues and associated profits of the acquired business, a step up from the earlier arrangement. The third quarter captured about a month’s contribution from the acquisition, which is reflected in the 54% year-on-year (y-o-y) growth in Q3FY23 revenues to `1,507 crore. BBL will capture the full quarter’s financial contribution from Viatris’ biosimilars business starting Q4FY23, when revenues are expected to increase to `2,000 crore. Directionally, Biocon Biologics will be exiting FY23 at a $1-billion trajectory, excluding vaccines.
R&D is integral to Biocon. Your spend on R&D (net basis) increased 144% y-o-y in Q3FY23 to Rs 337 crore. Can we expect any further increase?
R&D is integral to Biocon as it is an investment in advancing our pipeline to drive future growth. Given that several of BBL’s biosimilars are in the clinical stage, which is the most expensive phase of a molecule’s ‘lab to market journey’, its R&D investments during the quarter increased to `280 crore, representing 19% of Biocon Biologics’ revenues. As we factor in the full revenues from Viatris’ biosimilar businesses, we expect R&D investments to stabilise at 12-15% of BBL’s revenue.
How is your partnership with Serum Institute Life Sciences shaping up?
Having signed a definitive agreement, our strategic alliance with Serum Institute Life Sciences (SILS) is currently in the phase of obtaining requisite regulatory approvals. We believe this alliance is an important step in our strategy of ‘expanding on adjacencies’ by leveraging our existing strengths. Adding vaccines to our portfolio via the SILS deal will be a potential growth driver for BBL in future.
What could be the challenges going ahead? How is the company planning to strengthen its offerings?
The uncertainty in the global scenario notwithstanding, Biocon continues to enjoy strong fundamentals. This can be seen in the 36% y-o-y growth in our Q3FY23 revenues, which was driven by our Biosimilars Business and Research Services Business delivering strong year-on-year growth of 54% and 23% respectively, and our Generics Business growing at a healthy 18%. Each of these three businesses is uniquely differentiated and has attained a leadership profile that prepares us for an exciting future.
What revenue mark is the company targeting as we near the end of FY23 and what will the growth in FY24 look like?
We expect to end FY23 on a strong note, with healthy growth across all our businesses. Biocon Biologics will be the key growth driver, as it begins to reflect the full quarter’s revenues of the newly acquired Viatris business from Q4FY23. Directionally, Biocon Biologics will be exiting FY23 at a $1-billion trajectory, excluding vaccines. Growth in FY24 will come from the launch of biosimilar Adalimumab in the US and continued growth in Glargine, Trastuzumab and Pegfilgrastim biosimilars. Launches of biosimilar Aspart and biosimilar Bevacizumab in the US, post approval, will provide additional upside. Biocon is confident of delivering mid-teens growth in the coming fiscal.