Biocon’s Chairperson Kiran Mazumdar-Shaw in a QnA with FE’s Srinath Srinivasan, talks about the bold moves Biocon Biologics is making since 2021, including the recent acquisition of Viatris’ global biosimilars business, which will provide it a direct entry into the US & Europe with the acquired commercial engine in developed and key emerging markets. This will spur the company on a strong path for future growth & value creation for all stakeholders.
You have recently announced a sizable acquisition worth over $3 billion to acquire your partner Viatris’ global biosimilars business. How does this acquisition dovetail with your growth plans?
Biosimilars offer an attractive global opportunity. Globally, the uptake of biosimilars has increased rapidly, and this trend looks set to continue over the next decade. According to IQVIA, global biosimilar sales value is expected to grow at a CAGR of 15% between 2020 and 2030 reaching an estimated USD 75 billion within the next decade.
Biocon Biologics, through its long-standing global partnership with Viatris, has achieved many firsts and set new benchmarks for the global biosimilars industry. Going ahead, we believe a fully integrated model will become increasingly important for companies to drive sustainable growth as the global biosimilars industry matures. Our acquisition of Viatris’ global biosimilars business is an important step in making Biocon Biologics, a world leading, fully integrated biosimilars company, setting us up for long-term business growth and value creation for all our shareholders.
In our over decade long Biocon’s collaboration with Viatris, we have contributed our R&D and manufacturing strengths while relying on Viatris’ strong commercialization capabilities to achieve business success. This acquisition fills the gaps in our missing capabilities in developed markets, especially around supply chain and commercialisation. We also get to realize full revenues and profits from the acquired business, whose revenue is estimated to be USD 1 billion next year.
Besides enabling us to attain a direct commercial presence in the developed markets of U.S. & Europe, this deal fast-tracks our journey of building a strong global brand. It will also make us future-ready for the next wave of our products under development. Moreover, our long-standing relationship with Viatris positions us well to seamlessly and rapidly integrate and thereby maximize value from this transaction. This acquisition is thus value accretive for both Biocon and Biocon Biologics shareholders. The deal will expand BBL’s EBITDA base and strengthen its overall financials, enabling investments for sustained long- term growth.
You have spoken of a pipeline of 20 biosimilars. How will the Viatris acquisition strengthen your pipeline? Which are the markets you are targeting? How much are you investing in the line and what are the returns you are expecting?
The acquisition of biosimilars assets of Viatris will significantly strengthen our position in providing affordable access to patients through our portfolio in diabetes, oncology, immunology and other non-communicable diseases. By integrating Viatris’ portfolio, we will have one of the broadest and deepest commercialised biosimilars portfolio in the industry, including rh-Insulin, bGlargine and bAspart for diabetes; a growing biosimilar oncology portfolio, including bTrastuzumab, bBevacizumab, bPegfilgrastim. We will also have significant presence in the autoimmune segment through in-licensed products like bAdalimumab, bEtanercept as the acquisition helps us obtain Viatris’ rights in its in-licensed assets of Adalimumab and Etanercept. We also have the option to acquire Viatris’ rights in its advanced development program, biosimilar Aflibercept.
Biocon Biologics current portfolio of 20 biosimilars includes biosimilar assets partnered with Viatris, as well as several other assets being developed independently.
This acquisition will accelerate Biocon Biologics’ direct commercialization strategy for its current and future biosimilars portfolio by providing a direct presence in developed markets like U.S., Europe, Canada, Japan, Australia and New Zealand and some of the emerging markets.
For Biocon Biologics, investment in R&D is an inherent part of the business model and an increase in R&D spends reflect progress on several of our biosimilar development programs that will fuel our future growth. As our next wave of biosimilars enter the clinic, we anticipate increase in R&D spend.
We believe the strong cost benefits and synergies derived from the combination of Viatris business with Biocon Biologics will expand our EBITDA and improve our financial profile.
How has the value chain recovered from the Covid-19 impact since last year? What is the kind of revenue target that the combined entity is aspiring for in the coming years?
As the impact of the COVID-19 pandemic wanes, Biocon Biologics is witnessing market share gains in developed markets and strong growth in India & emerging markets. Combining the biosimilars business of Viatris with Biocon Biologics to create a global, vertically integrated business positions us to make a difference to patients and healthcare systems in a post-COVID world. Through our strong portfolio of in-market and in-development biosimilars covering oncology, diabetes & immunology and other non-communicable diseases, we will offer one of the industry’s broadest and deepest global biosimilars pipelines.
Biocon Biologics will gain Viatris’ global biosimilars business whose revenues are estimated to be USD 1 billion next year Post closure of the deal, Biocon Biologics will realize the full revenue and associated profits from its products partnered with Viatris; a step-up from our existing arrangement of realizing a smaller fraction of the economic benefit.
We cannot provide a revenue outlook. However, there are multiple near-term catalysts, such as revenues generated from the vaccines alliance with Serum Institute and the U.S. launch of biosimilar Bevacizumab, Aspart and Adalimumab in the future, which will further propel our business. We will also have the option to acquire Viatris’ rights in its biosimilar Aflibercept, an advanced asset. Biocon Biologics is building a comprehensive portfolio of biosimilars and vaccines with a clear growth path in the near to medium term.
Please shed some light on how the partnership with SILS is shaping up? Have you mapped synergies? What are the areas you bullish on as part of the collaboration? When can we expect the first codeveloped vaccine/drug?
The strategic alliance with Serum Institute Life Sciences which involves merger of Covishield Technologies Private Ltd into Biocon Biologics with effect from 1st October 2022 is on track. We are submitting the relevant regulatory filings.
Vaccines and antibodies for infectious disease are a natural adjacency to Biocon Biologics’ existing capabilities in biologics for non-communicable diseases. The structure of the alliance provides us with an asset light and accelerated entry into this segment. The need for vaccines has never been stronger as the world continues to battle infectious diseases. The long-term supply arrangement of 100 million vaccine doses annually from Serum provides Biocon Biologics with an additional assured revenue stream and associated margins. And, the partnership provides a framework to explore several other opportunities that would be value accretive to both our organizations and make a difference in the often overlooked infectious diseases.
Initially, Biocon Biologics would be leveraging SILS vaccines portfolio, including COVID vaccines. In addition to COVID vaccines, there are vaccines for mosquito borne diseases. Biocon Biologics and SILS will also jointly develop a portfolio of next generation vaccines over time.
We expect to start recognizing revenues from the SILS partnership from the second half of FY23.
What is the status of return to office at Biocon? How are the R&D activities being carried out amidst Omicron threat? What are some key changes made to manufacturing facilities to ensure operational continuity? What is the employee sentiment like in the company?
We are currently working at almost full capacity with most of our employees returning to work.
By creating robust processes and investing in “future ready” technology we ensured business continuity and safety of our R&D talent while delivering on many key product approvals in FY21. Replacing paper-based processes with electronic workflows helped improve efficiency, collaboration, compliance and data security. A highly motivated team of scientists drove the momentum towards achieving organizational objectives through sustained efforts on all fronts in order to manage and advance the Company’s pipeline of biopharmaceuticals.
The COVID-19 pandemic accelerated the pace of our organization-wide digital transformation journey to prepare for a digital future. Deploying digital technologies in our manufacturing and supply chain has helped us gain real-time control all the way from procurement to production to serve patients in diverse markets. These new digital tools are enhancing quality and compliance, augmenting productivity through enhanced operational excellence and enabling data integrity through technology-led data transparency.
Our people have exhibited immense courage and commitment to manage the crisis driven by a singular purpose of serving patients during the pandemic, and continue to do so.
While you are bullish on Biosimilars, your generics business seems to have also recovered as evident from your Q3 FY22 results. What are some updates from the segment? What are your plans for the segment, both in terms of R&D and market expansion, for FY23?
For Q3FY22, the Generics segment delivered quarterly revenues of ₹607 Crores indicating a sequential growth of 15% and a year-on-year growth of 7%. The quarter saw a return to normalized operations, which had been impacted due to COVID related challenges in previous quarters. The robust sequential growth was due to the successful launch of our vertically integrated complex formulation, Everolimus, in the US, which was also a Day-1 launch for its 10 mg strength.
We are also witnessing a good uptick in our generic APIs business. The launch of Everolimus was also a key driver in the year-on-year growth of the segment. Since the launch, the product has gained traction and we expect that this product will continue to contribute to the growth of our Generics portfolio.
We continue to focus on portfolio and geographical expansion, as well as strengthening our development pipeline. In FY21, the business accomplished 33 filings and received 14 approvals for APIs globally, reflecting our commitment to expand our API portfolio, as well as reach. We are also expediting the capacity enhancement projects. Our greenfield Immunosuppressants API manufacturing facility in Visakhapatnam continues to remain on track to be commissioned by the end of FY22, with qualification and validation in FY23.
The article first appeared in Financial Express on 24 March, 2022