Biocon Biologics to acquire Viatris' biosimilars assets for up to $3.335 bln

Biocon Biologics (BBL), a subsidiary of Biocon, has entered into a definitive agreement with its partner Viatris Inc.

Accordingly, BBL will acquire Viatris' biosimilars business to create a unique fully integrated global biosimilars enterprise.

Viatris will receive cash consideration of $2 billion on closing of the transaction and up to $335 million as additional payments expected to be paid in 2024. Additionally, upon closing of the transaction, BBL will issue $1 billion of Compulsorily Convertible Preference Shares (CCPS) to Viatris, equivalent to an equity stake of at least 12.9% in the company, on a fully diluted basis.

The transaction is expected to close in 2H-2022, subject to satisfaction of closing conditions (including certain regulatory approvals). The companies will also enter into a transition services agreement, pursuant to which Viatris will provide certain transition services, including commercialization services, for an expected two-year period. Viatris also will pay $50 million to BBL to fund certain capital expenditures.

The cash payment of $2 billion will be funded by $800 million raised through equity infusion in BBL and the remainder to be funded by debt, additional equity or a combination thereof. BBL has received expressions of interest from financial institutions for debt financing and equity commitments from existing shareholders.

BBL will have a comprehensive portfolio comprising its current range of commercialized insulins, oncology and immunology biosimilars as well as several other biosimilar assets currently under development. BBL also has access to the vaccines portfolio through its previously announced partnership with Serum Institute Life Sciences (SILS).

Kiran Mazumdar-Shaw will continue as the executive chairperson of BBL. Viatris will designate Rajiv Malik, president of Viatris, to serve on the BBL board.

Post closure of the deal, BBL will realize the full revenue and associated profits from its partnered products, a step-up from its existing arrangement with Viatris. The deal will expand BBL's EBITDA base and strengthen overall financials, enabling investments for sustained long- term growth. The deal will lead to operational efficiencies across the complete value chain and build agile capabilities in development, manufacturing, regulatory, supply chain and commercialization in developed and emerging markets.

BBL currently has a portfolio of 20 biosimilars. The acquisition of biosimilars assets of Viatris significantly strengthens BBL's position in providing affordable access to patients through its portfolio in diabetes, oncology, immunology and other non-communicable diseases. It also prepares BBL for greater success with the commercialization of its future pipeline.

Kiran Mazumdar-Shaw, executive chairperson, Biocon Biologics, said: "This acquisition is transformational and will create a unique fully integrated, world leading biosimilars enterprise. Our long-standing global partnership with Viatris has enabled us to achieve many firsts, setting new benchmarks for the global biosimilars industry. This strategic combination brings together the complementary capabilities and strengths of both partners and prepares us for the next decade of value creation for all our stakeholders."

"The deal will enable BBL to attain a robust commercial engine in the developed markets of U.S. & Europe and will fast-track our journey of building a strong global brand. It will also make us future-ready for the next wave of products. This development takes our partnership with Viatris to the next level to realize our shared purpose of impacting global health by providing affordable access to high quality essential and life -saving Biosimilar drugs," she added.

BBL is a fully integrated global biosimilars organization. It is leveraging cutting-edge science, innovative tech platforms and advanced research & development capabilities to lower costs of biologics therapies while improving healthcare outcomes. It has a strong research pipeline of biosimilar molecules across diabetes, oncology, immunology and other non-communicable diseases. Five molecules from Biocon Biologics' portfolio have been taken from lab to market in developed markets like U.S., EU, Australia, Canada, Japan and key emerging markets.

Biocon is a global biopharmaceuticals company committed to enhance affordable access to complex therapies for chronic conditions like diabetes, cancer and autoimmune.

Biocon's consolidated net profit jumped 17.68% to Rs 219.60 crore on a 17.05% surge in revenue from operations to Rs 2,174.20 crore in Q3 FY22 over Q3 FY21.

Shares of Biocon were down 2.98% at Rs 382.40 on the BSE.

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