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  1. Biocon target price Rs 889; Morgan Stanley says base case scenario value

Biocon target price Rs 889; Morgan Stanley says base case scenario value

In this note, we present the two Q2 sales data points, as relevant to unfolding global bio-similar theme. These are related to Lilly's glargine in EU markets and Sandoz's overall biopharmaceutical portfolio. This is relevant to Biocon’s upcoming bio-similar launches in EM in 2017 and then EU (2018) and US (2019).

By: | Updated: August 5, 2016 8:05 AM
Biocon, Biocon News, Biocon Share Price

Biocon is already selling glargine in India and is now ramping up in Colombia and Mexico markets. Among developed markets, it has recently launched glargine in Japan. (Reuters)

In this note, we present the two Q2 sales data points, as relevant to unfolding global bio-similar theme. These are related to Lilly’s glargine in EU markets and Sandoz’s overall biopharmaceutical portfolio. This is relevant to Biocon’s upcoming bio-similar launches in EM in 2017 and then EU (2018) and US (2019).

Lilly reported sales of $16mn from Basaglar (glargine insulin biosimilar) in Q216 vs 11mn in Q116. It is in early days of global launch cycle and, hitherto, Basaglar is being marketed in a number of European countries, Japan and Canada. In the last four quarters, it has steadily ramped up market share with sales now annualizing to $ 64 million. Basaglar market share by the end of Q2 (TRx SOM) was 25% (vs. 17% in 1Q) in Slovakia, 13% (vs. 11% in 1Q) in Japan, 6% (vs. 4% in 1Q) in the Czech Republic and 2% (flat) in 1Q) in Germany. We note that in countries such as Germany and Spain, where there is no co-payment, Lilly has low market share of 3-5%. Lilly plans to launch Basaglar in the US in December 2016.

Biocon is already selling glargine in India and is now ramping up in Colombia and Mexico markets. Among developed markets, it has recently launched glargine in Japan.

Our target price of R889 is our base case scenario value, derived from applying a target P/E multiple of 30x to our F2018 EPS estimate of R29.6.

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