Malaysia plant boosts Biocon prospects in US and other key markets

Firm seen benefiting from operating leverage, biologic sales by FY22

Even as the benchmark indices declined 6.4 per cent over two sessions, the Biocon stock jumped 8 per cent during this period. The gains came after the company received a go-ahead (EIR) from the US drug regulator, following an inspection of its insulin manufacturing facility in Malaysia.

EIR refers to establishment inspection report, granted by the US FDA upon closure of its inspection. This paves the way for approval (to launch) and commercialisation of insulin (Glarg­ine) in the US. The company, along with its partner, had already won a patent ligation for insulin Glargine in the US and had, thereafter, filed for the launch of the drug.

However, analysts had remained watchful on developments pertaining to the Malaysia plant. The clearance will boost its growth prospects in the US and other key markets.
 

Regulatory challenges have eased with the company receiving an EIR for its small molecules facility in Bengaluru, recently. This means growth momentum in the small molecules business, too, will sustain.

 

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

Biocon had already commercialised Ogivri — a biosimilar for oncology drug Trast­uzumab — in the US some time back. This is in addition to the launch of oncology biosimilar (Pegfil­grastim).

Addi­tional approval granted to the company’s new manufacturing facility in Bengaluru for the manufacture of Pegfilgrastim will help Biocon address the growing market opportunities in the US and other global markets.

Hence, analysts remain positive on its 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.