Decision on merger with Biocon Biologics soon, says Siddharth Mittal

We are talking about the GLP-1 opportunity and our strong franchise in insulins. There is a huge demand in the global diabetes-obesity segment, said Siddharth Mittal

Biocon successfully raised ₹4,500 crore through a qualified institutional placement (QIP) last week that saw strong interest from both Indian and global investors. It is also considering a merger of Biocon Biologics with Biocon to tap into business and scientific synergies rather than listing Biocon Biologics. In a virtual interaction with Sohini Das, Siddharth Mittal, chief executive officer (CEO) and managing director (MD) of Biocon outlined his plans. Edited excerpts: 

 

Your QIP was successful. What do you plan to do with the proceeds?

 

There was very strong investor demand. The Board had approved raising up to ₹4,500 crore in one, two or more tranches. The demand was so strong that we decided to complete the entire thing in one round. This allows us to increase our stake in Biocon Biologics from 72 per cent on a fully diluted basis to 79 per cent. The most important thing is investor confidence in our strategy and in our long-term vision of the business and growth plans. We have private equity (PE) obligations of around $550 million coming up where we have an exit obligation by the end of this financial year. A large part of the proceeds from the QIP will be used to retire those PE obligations.

 

Is there any change of plan around Biocon Biologics’ initial public offering (IPO)?

 

We had told the markets that we are going to take Biocon Biologics public. Given the uncertainties over the last few months on the IPO market itself, the Board had constituted a committee to look at other options that can be evaluated, including a merger between Biocon and Biocon Biologics. The committee constituted last month has had a few rounds of discussions. It will be making a formal recommendation to the Board in the coming weeks. Once a decision is finalised, we will let the investors know.

 

Who are the committee members and when is the panel likely to submit a recommendation?

 

The six-member committee comprises some independent directors on the Board, the executive directors and is being advised by an external consultant and various bankers. The committee is expected to submit its recommendations in the coming weeks. Hopefully, we will be ready with the recommendations before the next Board meeting on August 7. 

  Why is a merger being considered instead of an IPO?

 

We are talking about the GLP-1 opportunity and our strong franchise in insulins. There is a huge demand in the global diabetes-obesity segment. If we combine the two portfolios, then there are business synergies. Thus, this is one of the considerations for a merger apart from the financial consideration. In generics or biosimilars, the touch point with doctors is limited. This is especially true in the US, where the touch point is either with wholesalers or formularies. If we have a broader portfolio which addresses both GLP-1s and insulins, it does give an advantage from a purely commercial perspective. There are synergies on the business and the scientific sides. In many parts of the world, we have common partners where we have licensed out insulins. We are talking about licensing GLP-1s to the same partners. So, we think it will create synergies in many markets. A merger will help to have one leadership team and one commercial team instead of two. This will make it operationally more streamlined.

 

What are the major upcoming payment obligations?

 

There are $800 million bonds that we had taken in September 2024 which will come up for payment in September 2029. We have more than four years for that repayment. We have a bank debt of $350 million for which repayments start in calendar 2026, but the majority is payable in calendar 2028 and 2029. We have time for the business and free cash flows to grow and align the repayments with that. We have a few important launches this financial year starting with a biosimilar of bevacizumab. These launches should drive double-digit growth in FY26.