Setback for Biocon's European biosimilar plans

French regulator's observations about the formulation facilities will delay product launches

Regulatory concerns for Biocon increased after the French drug authority issued certain observations following an inspection of the Bengaluru facility.

The pre-approval inspection of drugs and products sites were related to pending European marketing authorisation applications for Biocon’s biosimilars. These include Trastuzumab (oncology drug), Pegfilgrastim (diabetes drug) and related insulin medication Glargine. With the observations, remedial actions followed by a successful re-inspection will enable the company to get a good manufacturing practice (GMP) certificate. Approvals for product launches will start only after a GMP certificate is issued.

The company said no critical observations were made in the report after inspections in March. Corrective and preventive actions have been submitted to the French regulatory authorities and these were being reviewed. The company also clarified that its device facility that produces Glargine Pens has not received any observations.

The Street was worried about any escalation of this and the stock lost more than nine per cent intraday, before it closed at Rs 321.25, down four per cent, on Monday.

The Street was expecting early launch of biosimilar products in the European Union and the US. A delay in approval for formulation manufacturing facilities means the launch timeline remains uncertain. Analysts at Kotak Institutional Equities say all three biosimilar applications in the European Union are unlikely to be approved until regulators clear the facility. This could take 12-15 months, given the need for plant modifications as well as procedure changes.

The news is a negative for the Biocon stock. The stock prices had risen significantly with the progress in biosimilar filings by Biocon, in association with its partners in the US and European Union (EU). The stock had more than doubled since the start of 2016.

News of regulatory issues came at a time when the company was looking at monetising its Trastuzumab filings in the US, too. The audit committee meeting for the oncology product launch is scheduled in July, say analysts, and a favorable outcome is key for launch visibility in the US. Analysts at Kotak say delay in US approvals is likely, though Herceptin (Trastuzumab) patent settlement gives Mylan and Biocon 12 months to get the product approved without hurting launch timelines, they add.

All these uncertainties will keep the stock prices under pressure till there is more clarity on approvals and launches.