Kiran Mazumdar-Shaw, Executive Chairperson of Biocon and Biocon Biologics, shared some exciting updates about the company's growth trajectory in an exclusive interaction with CNBC-TV18. According to Shaw, Biocon and Biocon Biologics are in a strong position to pursue a high-growth trajectory.
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As per her, with the recent Viatris acquisition, strategic equity raising, and a billion-dollar trajectory for the biosimilar business, the company is well-positioned to continue its success in the coming years. “We believe we are in a very strong position to get onto a very high growth trajectory in our biosimilars business,” she said. “We are in a very strong growth phase and in the next few years, we will demonstrate that.”
Here are the edited excerpts from the interview:
Q: Brokerages are bullish on the biosimilars opportunity. Bernstein says more than $50 billion worth of biologics is estimated to lose exclusivity up to 2028 which offers a large market opportunity for you, in specific five new launches in the next three years. What could the potential sales from these products be and what do you see in terms of competitive pricing pressure for biosimilars?
A: Our recent Viatris acquisition puts us in a very strong position to address these very large opportunities that you mention. The important aspect of the opportunity is also the fact that we are a truly vertically integrated biosimilar company, which makes us very competitive in the very small biosimilar space. There aren’t too many companies that are in the same position of being vertically integrated.
In terms of the pipeline and the number of products in the market, I don't think many companies are in that enviable position. So, given the fact that we have four products or at least three plus one product in the US and eight products in Europe and of course, we expect two more products to be added to the US followed by a very strong pipeline of products. We believe we are in a very strong position to really get on to a very high growth trajectory in our biosimilars business.
At a Biocon level, I also believe we have a uniquely differentiated set of companies starting with, of course, Biocon Biologics and its biosimilars. We have Syngene and its very uniquely differentiated results services play, and then we have to add to that, of course, Biocon’s growing stature in APIs and very differentiated speciality generics. So, I do believe we are in a very strong growth phase, and in the next few years, we will demonstrate that.
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Q: At the end of the third quarter, there was an indication that perhaps at an opportune time, Biocon would look at selling some stake in the biologics business. Are you anywhere closer to that, in terms of any interesting conversations, or anything on the table?
A: As I mentioned, we made a large acquisition, and we have taken on a large, very serviceable debt, I might add. But, we do believe that reducing that debt to a slightly lower level would help the business in a way that sort of makes our balance sheet far stronger. I don't think we would like to make it sound as if this is dire because I think we are in a very healthy position.
Our current EBITDA levels are strong enough to support the kind of debt we have taken on. I have just returned from the US where the business prospects look extremely bright. And, I for one, believe that our stock is not well analysed and understood. Investors need to dive deeper into what we're doing. Our recent spin-off, the novel spin-off that we have in Boston, Bicara Therapeutics was oversubscribed. I think we have a uniquely differentiated business in India and I hope that investors recognise that.
Q: The market for pharma M&A seems to have opened up. We saw that $40 billion Pfizer deal. Have you had conversations with investors? You said the business is not well understood. Is there any pushback or it is on track? I am talking about the stake sale in Biocon Biologics. And even in Syngene, there was some chatter about whether you might want to look at a little more stake sale there...
A: As far as Syngene is concerned, we unlocked value at a time when we needed it. I think we don't have any plans to unlock it further. As far as, Biocon Biologics is concerned, we are looking at raising some equity to offset some of the debt, but it's not going to significantly impact Biocon’s holding in Biocon Biologics.
Biocon Biologics remains a very important play for us. And I don't think we will ever have a stake sale that will compromise that. And, the M&As mentioned are about Big Pharma looking for new novel assets. But I would like to say that Bicara itself is a hugely differentiated asset. And I'm very excited that it came from our research stable.
Q: What is the status of US approvals, especially for insulin as well as Bevacizumab? And also the status of approvals for Aflibercept...
A: Adalimumab has been approved. We are waiting for the launch date in July. We expect that to be a very important launch for us. As far as Bevacizumab is concerned, we are on track to address our CRLs and hopefully get approval soon. I'm unable to comment on when exactly that will happen. As far as Aflibercept is concerned, it is under review and the approval can happen anytime later this year.
We have two other assets in the clinic, and we expect to be filing those two assets in this in the coming fiscal year. So, we are very excited with our pipeline, with the progress we're making in developing the pipelines, with the kind of effort we are taking in terms of getting on track with all the approvals. Having said that, all our businesses seem to have a huge potential.
Q: The Street seems to be listening to what you are saying, and they seem to be liking it as well, just going by the way the stock has moved. If you could put some numbers to how exciting the opportunity is because the biosimilar business in the third quarter did record revenue? Do you aim for a billion dollars in revenue this year? Bernstein expects $1.25 billion in the next fiscal year, followed by almost $3 billion by FY28. Are these numbers somewhere close to your internal targets?
A: I believe so. That's what we've indicated. We've indicated to the market that we will exit this fiscal year at a billion-dollar trajectory, in terms of our biosimilars business. We are already basically delivered at a group level at a billion dollars. And we expect that to jump pursuant to the Viatris acquisition. So, we are entering a very high growth phase.
Q: For the Viatris acquisition, Serum had given a loan, I think it was about 150 million. There was some chatter that maybe Serum is looking to convert this amount into equity. Could you share if any such plan is on the table? And again, going back to Biologics, you said of course there might be some stakes sale but your commitment remains to the business. How much would you be comfortable selling 5-10 percent in Biologics?
A: At the moment we haven't quite honed in on the actual number, but suffice it to say that we will have a very significant stake in Biocon Biologics. And obviously a much greater than a majority stake.
As far as the Serum loan is concerned, at the moment it is a loan at any point in time, I think Serum believes in the business and obviously, they believe that if there is merit to convert it into equity we would welcome it.
For more details, watch the accompanying video