Biocon looking to unlock value
Financial Express reports that BIOCON, India’s largest biotechnology company, is in the
midst of coordinating a series of moves aimed at taking it to the next growth
orbit.
The key step among these is to list Syngene, its contract
research subsidiary, by the first half of next fiscal. This fiscal, it also
expects to complete building its first greenfield overseas manufacturing
facility in Malaysia—billed as Asia’s largest integrated insulin manufacturing
facility—though the process of plant validation and getting regulatory
clearances will take much longer. The company, which last year launched a
trastuzumab biosimilar targetting the R130 crore market for breast cancer
treatment in India, says its R&D pipeline is progressing well. Two
additional global biosimilar programmes entered clinical trials recently. It is
also expecting some critical readouts from clinical trials of its oral insulin
drug in the US. Biocon is partnering with American pharma company Mylan for the
global development and commercialisation of generic versions of three insulin
analog products.
In the near term, however, it has to manage growth on the
strength of Syngene and the India-focussed branded formulations business while
its R&D spends continue.
Biocon says it has shed nearly a third of its products in
the branded formulations space over the past year as part of a strategy to
increase profitability by focusing on specialty products and turning them into
big brands. “Our focus now in branded formulations is about profitability, not
just top line. We have actually shed a number of products,” said Kiran
Mazumdar-Shaw, chairman and managing director of Biocon. “The biosimilar is a
very integral part of our future business, these are very strong growth drivers
for us initially in the emerging markets and tomorrow in the developed markets.
These are investments we have to make because these are integral to our
business model.” Biocon has indicated that it plans to spend 10% of its
biopharma revenue on R&D.
Syngene’s October-December 2014 revenue has grown 20%
year-on-year to R 220 crore. Biocon, which holds 85.54% stake in Syngene, has
said it will now start the process of selecting bankers to manage an offer for
sale to the extent of 10-15% stake by the first half of FY16. Syngene
International’s director Peter Bains said that the contract research arm has a
capital spend plan of around $200 million. “But of that, only about 40% is
currently committed, where we have clear visibility of expansion opportunity or
new capabilities and the other 60% is in plan but not yet committed, and we
will look at the business visibility and triggers before we would commit that,”
he said.
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