Biocon Q2 net remains flat at Rs 102 cr

The growth of core biopharma business has been muted due to capacity constraints and geo-political challenges in West Asia

Biocon’s net profit for second quarter-ended September 30, remained at Rs 102 crore, which is nearly the same as during the corresponding period last year. The revenues of the company rose three per cent to Rs 773 crore during the quarter, compared to Rs 753 crore in the same period last year.

The rise in its income has come from branded formulations, which recorded a growth of 17 per cent to Rs 116 crore, the company said. Commenting on the quarterly performance and highlights, Kiran Mazumdar-Shaw, chairperson and managing director, said: “The growth of our core biopharma business this quarter has been muted largely due to capacity constraints and geo-political challenges in West Asia. However, clinical progress in our key global programmes for generic insulin Glargine and Trastuzumab is indicative of the value accretion that is realisable in the near future.”

The strategic investment by Silver Leaf Oak in Syngene validates the strength of our research services business and sets a good valuation benchmark. Whilst we continue to invest in R&D and capacity building for our insulins and antibodies portfolio, we expect branded formulations and research services businesses to drive growth in the interim.”

Biocon, through its subsidiary Biocon Research Limited (BRL), has bought back GE Equity International Mauritius's 7.69% stake in Syngene for Rs 215.38 crore. Subsequently, it entered into an agreement to sell 10% to Silver Leaf Oak (Mauritius) Limited, valuing Syngene at Rs 3,800 crore. The transaction is subject to standard condition precedents including regulatory approvals in India.

The biopharma segment of the company recorded revenues of Rs 442 crore during the revenues, which grew barely 1%.

The biopharma business continues to be impacted by various factors like geo-political challenges in terms of credit risk in the Middle East and North Africa (MENA) region, reduced offtake of specialty API, and capacity constraints, affecting the growth of this business, Biocon said in the release. The outlook for the biopharma business remains challenging for the remaining part of this fiscal.

"We continue to work towards further optimisation of our product portfolio in the small molecules vertical. During the quarter, we further added to our list of ANDA filings, targeting the US generics market," it said.

Meanwhile, Biocon's partner Mylan, according to the release, has initiated multi-centre phase III trials for its insulin glargine in the United States. Two trials, both for 24 weeks, comprising a total of 1,100 patients (500 type-1 diabetes mellitus patients & 600 type-2 diabetes mellitus patients) are expected to be completed by June 2016.  Also, the branded formulations business recorded revenues of Rs 116 crore in Q2 FY15.  

The vertical, according to the company, grew faster than the industry, reporting a robust growth of 17% YoY.  The growth this quarter was driven by oncotherapeutics, metabolics and nephrology divisions, the company said. The vertical continues with the strategy to drive synergies and profitable growth around key anchor brands and optimisation of product portfolios, it added.

The research services segment of the company has recorded a revenue growth of 11% to Rs 192 crore during the period.
 
Commenting on this performance, Peter Bains, Director, Syngene International, said: “Research services delivered a sequential revenue growth of 11% in Q2 FY15 reflecting steady business traction for our services. Our recent capacity additions have come online and we have a strong order book to support these in the near term. We continue to invest further across new and existing service platforms to sustain our growth curve and support the developing pipelines of our clients. A key highlight this quarter was the successful completion of a USFDA pre-approval inspection of one of our manufacturing facilities. We have, in the past 12 months, cleared two successive FDA audits."