Expect formulations biz to outpace API biz: Biocon Group CEO Peter Bains

Peter Bains discusses their efforts to gain market share in key regions, the impact of lower active pharmaceutical ingredient prices, and growth plans for biosimilars and generics

Biocon delves into the evolving dynamics of the biosimilar market, with a focus on its strategies and outlook for 2024-25 (FY25). PETER BAINS, group chief executive officer of Biocon, in a video interview with Aneeka Chatterjee, discusses their efforts to gain market share in key regions, the impact of lower active pharmaceutical ingredient (API) prices, and growth plans for biosimilars and generics. He also highlights Biocon’s strategic partnerships, debt reduction plans, and the expected recovery in their contract research business. Edited excerpts:

Biosimilar earnings before interest, tax, depreciation, and amortisation (Ebitda) margin reverted to 24 per cent despite high transition costs as research and development (R&D) expenses fell (minus 25 per cent quarter-on-quarter). What is the outlook for biosimilar R&D in FY25?

In FY25, as we’ve indicated earlier, we are working towards a core Ebitda margin in the early thirties range and an Ebitda margin of around 25 per cent. That is the outlook that we’re working towards.

How are you trying to gain market share in the biosimilar space?

This is an exciting part of the story. In the fourth quarter (Q4), we saw major momentum in the biosimilar business. In the US, we saw market share gains in all our major products: Pegfilgrastim, Trastuzumab, and Glargine.

We will be extending our reach beyond France and Germany into the UK, Spain, Italy, and other markets, which will serve as growth platforms.

In emerging markets, we had a record quarter of sales by leveraging direct-to-market models and partnerships, extending geographies, and introducing new products.

The momentum from Q4 is expected to continue into FY25, with substantial traction in the second half (H2) of the year.

Despite a complex global transition, we have not lost any patients, customers, or partners, and have seen revenue growth — a very encouraging picture.

How are lower API prices affecting your generics business?

Lower API prices are a sector-wide phenomenon, not just affecting Biocon. They are dragging down margins and impacting our competitive ability. However, our formulations business has shown strong momentum, compensating for the downturn on the API side and enabling us to finish the year with modest growth of 1 per cent.

Over the coming years, we expect the formulations business to grow faster and overtake the API business, reversing the current 75-25 API-to-formulations revenue proportion.

What efforts are you making to gain market share in the US with already commercialised products like Pegfilgrastim, Trastuzumab, and Glargine?
 

We are pleased with the quarterly performance in the US biosimilar business, with market share increases across the board.

Glargine grew to 15 per cent (18 per cent including closed circuit addition), Pegfilgrastim to 21 per cent, and Trastuzumab to 18 per cent. These gains reflect the strength of our North American team in addressing market opportunities across various channels.

This growth is the first glimpse of our strategy following the acquisition of the Viatris business, which has created a fully integrated model with strong commercial footprints not just in the US but globally. We saw a near 50 per cent growth in revenues in other markets, demonstrating good momentum after the transaction.

You have a pipeline including biosimilars Novolong and Avastin. Are delays in plant inspections in Malaysia and Bengaluru affecting future launches and growth?

We would have preferred not to have regulatory delays in the US, but we are in a good position now. We have completed the necessary paperwork in Malaysia and Bengaluru, with no pending scientific issues.

We are waiting for inspections, and if they go well, we could launch by the end of this financial year. We also plan to launch Ustekinumab in January, following the settlement with originators, and Fleabasep in mid-next year.

What is the update on your glucagon-like peptide-1 (GLP-1) launches?

Our generics business achieved its first approval in a developed market last quarter with Liraglutide in the UK. We plan to submit and register globally, leveraging our market models and partnerships. The GLP market is a big opportunity, potentially growing to $100 billion by the end of the decade.

Behind Liraglutide, we have Semaglutide and Tazepetide in the pipeline, along with additional GLP and gastric inhibitory polypeptide. We aim to build a strategic growth wave in the generics segment.

What is the growth outlook from the supply agreement signed with Eris Lifesciences?

We believe this partnership will improve access to our products in the Indian market. Early signs are positive, with a pickup in sales through Eris.

We have a 10-year collaboration for manufacturing and supplying products, which we believe is a strong model for our current pipeline in India.

Will you be selling/divesting any other portfolio from the India business?

No plans to do so at this point in time.

What is your debt reduction plan overall now?

Debt reduction is a management priority. We reduced debt by $250 million last financial year and plan to bring it down further in FY25. We are exploring various instruments and levers, including bank debt, equity raising, and hybrid models, and will update our plan as we execute it.

Biotech funding is slowing down. What lies ahead for your contract development and research business?

Syngene, our contract research, development, and manufacturing operation, saw a sector-wide reduction in capital in Q4. However, signs of recovery are already visible in the capital market, and we expect Syngene to pick up in H2FY25.

Despite the quarterly setback, Syngene grew 9 per cent over the year, reflecting its strength in diverse platforms and manufacturing capabilities. We expect continued growth as the capital market recovers.