Biocon says may demerge Syngene in long run, post IPO

MUMBAI (Reuters) - Drugmaker Biocon Ltd may hive off its contract research services arm, Syngene International Ltd, in the long run to help fund the development of its own products, it said, ahead of an initial public offering (IPO) of the unit.

Biocon, which owns about 85 percent of Syngene, will reduce its stake to about 74 percent through the IPO, and will consider monetizing more of its stake, founder Kiran Mazumdar Shaw said during a press conference on Thursday.

A demerger may be considered when Biocon is less financially dependent on Syngene, said Shaw, who started Biocon in 1978 out of a garage in Bangalore.

"Biocon is at a time when it needs to invest in capacity expansion of its production units. Syngene's margins, profitability and revenue are very, very helpful to buoy up some of Biocon's own needs," she said.

Biocon is in the process of developing a number of biosimilars -- copies of biological medicines that require high investment -- and is also starting out as an exporter of generic drugs to the United States.

Syngene provides contract drug discovery, research and manufacturing services to 17 of the world's top 20 pharmaceutical companies, including Bristol Myers Squibb & Co and Abbott Laboratories Ltd. Its revenue rose 25 percent in the last three years.

Syngene's IPO, which has been priced at 240 rupees to 250 rupees a share, will open for subscription on July 27 and close on July 29, Biocon said in a filing to exchanges on Thursday.

(Reporting by Zeba Siddiqui and Abhishek Vishnoi; Editing by Sunil Nair and Mark Potter)