Biocon Biologics Approaching Closure of Transaction to Buy Out Viatris’ Biosimilars Business

The global economy is in its steepest slowdown since 1970. The IMF has forecast that global economic growth will slow to 3.2% in 2022 and 2.9% in 2023 from 6.1% in 2021. While high inflation continues to make headlines across the globe, spiralling healthcare costs need to be addressed. Biosimilars, which provide affordable access to advanced therapies and can offer significant cost savings for patients, have the potential to reduce medical spends for healthcare systems overall. Thus, adoption of biosimilars is a necessity, and not an option anymore.

Viatris Deal: Right Timing

With biosimilars gaining ground globally, particularly in the U.S., the timing of Biocon Biologics’ acquisition of Viatris’ global biosimilars business couldn’t have been better.

This deal will enable Biocon Biologics gain Viatris’ commercial engine for biosimilars in the advanced markets of U.S., Canada, EU, Australia and New Zealand, in addition to several emerging markets.

Direct commercial presence in these markets will support Biocon Biologics’ existing and future pipeline of products. It will take us closer to patients, payors and healthcare systems and strengthen our position as a global biosimilars player.

Currently, Viatris enjoys majority of the economic benefit from our partnered biosimilars portfolio. Upon closing of the transaction, Biocon Biologics will realize the full revenue and associated profits from these products; a step-up from the existing arrangement. Thus, the deal will expand Biocon Biologics’ EBITDA base and strengthen overall financials, enabling investments in product portfolio and geographical expansion for sustained long-term growth.

This deal will also provide Biocon Biologics greater agility in decision-making and help improve operational efficiencies in supply chain, capital allocation and distribution, and will also bring us closer to patients.

Financing in Place to Close the Deal

Biocon Biologics has not only obtained the mandatory regulatory approvals, but also tied up the necessary financing for closing the Viatris transaction, which was announced this February.

Biocon Biologics will issue USD 1 billion of Convertible Securities and make an upfront payment of USD 2 billion to Viatris on the closing of the transaction. Biocon Biologics has secured USD 1.2 billion of debt. The balance amount will be funded through USD 650 million equity infusion by Biocon and USD 150 million infusion by Serum.

The equity infusion of USD 650 million from Biocon will be funded by USD 230 million from its existing reserves including the stake sale in Syngene and the remaining USD 420 million through mezzanine funding.

Biocon is already in the process of securing investments to retire the mezzanine finance, post deal closure.

Leadership Appointments in Anticipation of Deal

Biocon Biologics has made key leadership appointments this quarter to ensure smooth integration of the acquired business and ensure commercial success, particularly in advanced markets.

The Company appointed Stephen J. Fecho, Jr. as Global Head of Supply Chain Management. Stephen will lead the end-to-end supply chain function, including the transition and integration of front-end supply chain capabilities.

It has also appointed Stephen Manzano as General Counsel for Advanced Markets. He will lead Legal, Risk, Compliance and Audit functions in the Advanced Markets as well as Global M&A and IP.

The Company has also on-boarded key talent in our Advanced Markets Commercial team to build Market Access and Pricing, U.S. Policy and Advocacy capabilities.

The consolidation of Viatris’ global biosimilars business will add to the growth of Biocon Biologics, as well as position it as a fully integrated, leading global biosimilars player.