Biopharmaceutical firm Biocon, which announced its January-March earnings last week, saw good growth in its top line. The company’s subsidiary, Biocon Biologics, which earlier this fiscal announced two strategic transactions with Serum Institute Life Sciences and Viatris, expects the regulatory approvals to come by the second half of the current calendar. Kiran Mazumdar-Shaw, chairperson of Biocon and Biocon Biologics, in an interview with FE’s Rishi Raj discusses the company’s performance and other initiatives. Excerpts:
Biocon Biologics had announced two strategic transactions earlier this fiscal. What is the status on these deals?
Biocon Biologics’ two strategic transactions with Serum Institute Life Sciences (SILS) and Viatris announced in FY22 are progressing towards various regulatory approvals. We expect these deals to close by the second half of calendar year 2022. Combining the Viatris’ biosimilar business with Biocon Biologics accelerates the build out of our commercial capabilities in developed markets in order to become a strong global brand. Vertical integration will drive operational efficiencies and business agility, thereby underpinning cost-competitiveness. The vaccines alliance with Serum and our continued investment in R&D, adding products to our portfolio, opens up new growth avenues for Biocon Biologics in the coming years.
These deals will propel us on our path to be a unique, world-leading vertically integrated biosimilars company and will position us for long-term growth and value creation for our stakeholders.
Biocon reported a strong top line with all business segments reporting good growth, yet the net profit declined both at the quarterly and annual level. Can you please explain what impacted profitability?
Our consolidated revenue growth of 21% for Q4FY22, at Rs 2,476 crore, was driven by 48% growth in biosimilars, 26% in generics and 15% in research services businesses. The gross R&D spends for the quarter increased by 70% and on a full-year basis we invested over Rs 700 crore in R&D, which reflects the progress we are making in advancing our pipeline. As a science-led company, we truly believe that ‘pipeline is our lifeline’ and these R&D investments will drive our future growth. During the quarter, two of our Wave 2 biosimilar molecules moved into the clinic. We also continue to build a strong pipeline of niche formulations such as injectables, as well as peptide and potent APIs, in our generics business.
Our core Ebitda was up by 37% at Rs 815 crore for Q4, representing a healthy operating margins of 33%. Net profit was impacted on account of certain exceptional items, dilution in Bicara, and mark to market loss on investments. Adjusted for these items, net profit grew by 145% and 23% for the quarter and full year, respectively.
Biocon Biologics has commercialised interchangeable biosimilar. How has the product performed?
Our interchangeable bGlargine was commercialised in the US in November 2021, paving the way for other interchangeable biosimilars in the region. Viatris’ dual-product strategy and preferred status for our interchangeable bGlargine on the national formularies of express scripts and prime therapeutics have allowed us to rapidly ramp up market shares, moving up from a low single-digit share last year to 10% share now. Our partner Viatris expects to end CY2022 with mid-to high-teens market shares for our interchangeable bGlargine.
Do you expect the pace of growth of the biosimilars business to accelerate in the coming years?
Biocon Biologics has progressed well in the development of several next wave biosimilar programmes, with two of our molecules, Denosumab and Ustekinumab, entering the clinic. While net R&D spends were at 9% of revenues in FY22, we expect this to ramp up in FY23 commensurate with the progress of our rich and diverse pipeline which provides Biocon Biologics a sustainable growth opportunity in the years ahead.