Biocon's US prospects get a boost after company receives EIR from USFDA

The insulin patent win, clearance of Malaysian unit and oncology biosimilar filing are triggers

Even as the benchmark indices were down 4 per cent on Wednesday, the Biocon stock jumped 2.8 per cent. The company received a go ahead (EIR) from the US drug regulator after an inspection for its insulin manufacturing facility in Malaysia. EIR is an establishment inspection report, which is given by US FDA upon closure of its inspection. This paves the way for the launch approval and commercialization of insulin (Glargine) in the US. The company, along with its partner, had already won a patent ligation for insulin Glargine in the US recently and thereafter filed for the launch of the drug. However, analysts had remained watchful of developments pertaining to the Malaysia plant. The clearance will boost the company's growth prospects in the US and in other key markets.

The regulatory overhang has been on the decline as the company recently received an EIR for its small molecules facility in Bangalore. This means that growth momentum in small molecules business too, will sustain.

Meanwhile, Mylan and Biocon also filed for the biosimilar of another oncology drug AVASTIN (Bevacizumab) with the US FDA. The application review is to be completed by the end of 2020. Analysts feel that this could be the third oncology biosimilar of Biocon in the US. Given the global market size for the drug at $7 billion, this is a large opportunity for Biocon.

Biocon had commercialised Ogivri, a biosimilar for oncology drug Trastuzumab, in the US some time back. This is in addition to the company’s launch of oncology biosimilar (Pegfilgrastim) which is gaining traction. The company’s new manufacturing facility in Bengaluru, having received additional approval for manufacturing of Pegfilgrastim, will help Biocon address the growing market opportunities in the US and other global markets.

Analysts remain positive on the company's prospects and anticipate strong earnings growth. Analysts at PhillipCapital India expect 32 per cent annual growth in earnings during FY19-22, as they expect Biocon to benefit from significant operating leverage and improved biologic sales by FY22 with the visible cumulative benefit of expanded Pegfilgrastim, Trastuzumab and Glargine sales.