MUMBAI : Biocon Biologics Ltd, the biosimilar unit of drugmaker Biocon Ltd, has achieved a third of its post-deal integration with Viatris’s global biosimilar portfolio ahead of time and expects to focus on integrating its US and European operations in the next phase, chief executive Shreehas Tambe said, adding the company also expects to raise additional capital this year.
“Earlier, we had guided two years for the whole transition. A good part is the first wave has come way ahead of plan and is a good indicator of where we are headed,” Tambe said.
On Wednesday, Biocon Biologics said it had taken over the commercialization of Viatris’ biosimilar business in over 70 countries of emerging markets. Biocon Biologics closed the $3.34 billion deal to acquire the global biosimilar portfolio of Viatris in November 2022 in a mixture of cash and equity. Biocon paid $2 billion in cash, which included a $1.2 billion sustainability loan. It also issued compulsorily convertible preference shares (CCPS) to Viatris of approximately $1 billion.
The post-deal integration of the two entities was set up in three stages. In the initial stage, the integration with Viatris was focused on emerging markets. “Following this, we will focus on value, which will be coming in from our North American operations, which will follow next. And subsequent to that would be Europe, which is not one single monolith in any way, because there are multiple countries within the EU and the free trade zone. We would transition that (Europe) as the last wave of countries,” Tambe said.
Biocon Biologics is already benefiting from the deal, he added.
The last quarter of FY23 reflected the benefits of the boost that Biocon Biologics received from the merger. “It was a clear reflection on two things. One is the revenues have grown, and profitability has been maintained. Our Ebitda (earnings before interest, taxes, depreciation, and amortization) margins, which we constantly point to, have been in the 35-40% range,” Tambe said.
Biocon Biologics contributed 56% of the revenues for Biocon’s Q4FY23 revenues. “It continues to be the largest business segment for Biocon, with revenues of ₹2,102 crore, a growth of 114%, exiting the year on a $1 billion revenue trajectory,” Kiran Mazumdar Shah, founder and chairman and managing director of Biocon said then.
However, Biocon Biologics is likely to raise additional equity capital to reduce debt. “The business is very strong with cash flows, and we are able to support the kinds of debt leverage that we’ve taken on our books. It is a very healthy position, even from a multiple and Ebitda standpoint,” Tambe said. At the consolidated level, net debt is at $1.25 billion, excluding structured investments, Biocon said. “There is this perception (about the company’s high debt), but it is not really a business concern. We feel very confident that the business should be able to generate cash flows to pay down the debt, but we have said that we will be raising equity to bring down the debt,” Tambe added.
The new equity fundraising is expected to happen in the upcoming year, he said, declining to specify the size. The company’s current valuation is in the range of $5.4 billion, Tambe added.
Biocon, including Biocon Biologics, has raised $850 million in capital for Biocon Biologics from external investors. In May 2023, Edelweiss Alternative Asset Advisors received a competition commission of India approval for an approximately $100 million investment in Biocon Biologics. The company also has several other private equity investors.
It launched the biosimilar for adalimumab (used to treat rheumatoid arithritis) in the US this week, which is expected to be a major growth driver for the company. Two other immediate growth drivers for the company include its Aspart and Bevecizumab products. “We’ve been delayed for the two products for approval — which is (Insulin) Aspart and Bevacizumab. These products should have ideally come in sooner — but as we work past this, these are the other immediate growth drivers,” he said. Bevecizumab will be part of Biocon’s oncology portfolio.
Other products in the pipeline include biosimilar ustekinumab (a monoconal antibody used to treat several autoimmune conditions, including psoriasis, Crohn’s disease, ulcerative colitis, plaque psoriasis and psoriatic arthritis) and the denosumab biosimilar (monoconal antibody for treatment of osteoporosis). Tambe said that these will also multimillion dollar assets for the company. “Those are large, large assets coming into the market. We expect those to be the next growth drivers,” he added.
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Updated: 06 Jul 2023, 11:05 PM IST