Biocon’s biopharma journey took off on a differentiated path fraught with challenges. In the late 90’s when we started the prevailing business ethos in pharmaceutical sector favored a predictable and attractive ROCE (Return On Capital Employed) ventures based on chemically synthesized generic drugs. Biocon, however, chose to invest in developing biologic drugs based on recombinant DNA-led bio-processing technologies, which are extremely complex and expensive needing deep science for research and development.
The challenges were manifold, from an evolving regulatory landscape to significant financial outlay for R&D and manufacturing infrastructure. The path we had chosen was capital intensive, research-intensive and IP-intensive with inherently long gestational time lines for product commercialization.
To take on all these challenges, we laid a foundation of strong internal R&D capabilities across the entire development continuum spanning clone generation, process and analytical, pre-clinical and clinical development. We nurtured internal scientific talent and R&D infrastructure to support existing programs as well as an expanding pipeline. We consistently invested a substantial part of our revenue in R&D over the years. We created a deeply ingrained corporate culture that places a premium on good governance, compliance, integrity and collaboration. We consistently attracted top talent that shared these core values and believed in making a difference to patients globally.
We stayed the course and successfully managed both failures and risks because we believed in our business model. We constantly raised the bar by benchmarking ourselves against the global best. Our efforts paid off when we witnessed significant progress in our biosimilars pipeline in gaining approvals from the U.S. FDA, European Medicines Agency (EMA) and regulators of emerging markets in the past year.
We became the first company from India to get our biosimilars for Trastuzumab and Pegfilgrastim approved by the U.S. Food and Drug Administration (FDA). We also became the first company from India to launch a biosimilar in the US, through the commercialization of Fulphila™ by our partner Mylan.
We showed the world that a biotech company out of India could meet the quality and manufacturing standards demanded in developed markets.
Biologics Story Playing Out
We are now starting to enjoy the fruit of our labours. Biocon posted better-than-expected revenue and profit in the second quarter of FY19 on the back of a meaningful contribution to overall financial performance from its Biologics business.
We reported 35% growth in the consolidated revenue for the quarter aided significantly by the Biologics segment, where revenue more than doubled over year to Rs 367 Crore, close on the heels of the commercialization of biosimilar Pegfilgrastim in the U.S. by Biocon’s partner Mylan earlier in Q2FY19.
The contribution of the high-margin Biologics business also reflected in the better quality of earnings posted by Biocon this quarter. EBITDA increased 69% year on year to Rs. 394 Crore from Rs 233 Crore last year. EBITDA margin for the quarter was higher at 29% vs 23% a year ago. The Net Profit, excluding an exceptional income in the quarter, grew by 167% to Rs 184 Crore on the back of this strong operational performance.
- 2 Biosimilars approved by the USFDA, Ogivri (Trastuzumab) and Fulphila (Pegfilgrastim) in the US
- 1st to commercialize biosimilar Insulin Glargine in Japan
- EU approval for Insulin Glargine
- Positive opinion from EMA’s CHMP for approval in EU for both Trastuzumab and Pegfilgrastim
- We started global development program for a range of biosimilars much ahead of the other pharma and life sciences players in India
- The ONLY company in the world to have a global biosimilars pipeline that includes rh-insulin, insulin analogs, other recombinant proteins and monoclonal antibodies
Partnering to take Novel Asset to More Patients
Our journey into pharmaceuticals was led by our conviction to make a difference to global health through affordable innovation. Hence we chose an area of biologics to make affordable biologics both novel and biosimilars to address chronic diseases, where the cost of therapy was prohibitive for most patients.
Our ‘lab to market’ journey for biologics started with two novel monoclonal antibodies: Nimotuzumab, which was launched as BIOMAb EGFR® for head and neck cancer patients in India in 2006 and Itolizumab, which was launched as ALZUMAb™ for chronic psoriasis patients in India in 2013.
To take our novel asset Itolizumab to a larger patient pool we have partnered with Equillium Inc, a U.S.-based biotech company to which we have licensed out the novel anti-CD6 molecule for development in U.S. and Canada.
Our partner Equillium’s Investigational New Drug (IND) application for Itolizumab in an orphan indication of acute graft-versus-host disease (aGVHD) was accepted by the U.S. FDA in July 2018. Equillium also plans to develop the asset for additional indications like cGVHD and Asthma.
To fund the clinical trials Equillium has raised USD 65 million in its maiden public offering and got listed on NASDAQ on Oct 12, 2018. Biocon’s stake in Equillium post the IPO stands at approximately 13.5%.
The licensing and collaboration agreement with Equillium entitles us to certain manufacturing and supply rights as well as royalties and milestone payments when Itolizumab is successfully commercialized.
In Q2FY19, our Net Profit was boosted by an exceptional income related to an accounting change in our investment in Equillium. The one-time gain of Rs 171 Crore, net of tax expenses, led to our Net Profit for the quarter soaring over five-fold to Rs 355 Crore.
We expect momentum in the Biologics segment to continue with new market launches expected later in the year and increased penetration in markets where our products have already been commercialized.
The EMA CHMP’s positive opinions recommending approvals of Biocon and Mylan’s Trastuzumab and Pegfilgrastim augur well for the future growth of our Biologics business.
We have finished the first half of this financial year on a strong note and look forward to a robust performance across business segments in the second half.