Biocon IPO after integration of Viatris market: MD & CEO Shreehas Tambe

After the acquisition of Viatris’ global biosimilars business last year and Serum Institute Life Sciences doubling its investments to $300 million, Biocon Biologics (BBL), a subsidiary of Biocon, is gearing up for an initial public offering (IPO) now. Shreehas Tambe, managing director (MD) and chief executive officer (CEO) of Biocon Biologics talks about the company’s IPO roadmap, investment plans and Viatris integration, in a Zoom interview with Shine Jacob. Edited excerpts:

Serum Institute of India doubled its investment to $300 million in BBL, which is also backed by private equity (PE) investors. What is the plan ahead? How are PEs looking at an exit?

Serum Institute has invested around $150 million in Biologics before and they had actually given $150 million as a loan to Biocon Ltd. With the statutory approvals not going through, they were keen on completing their investment in Biocon Biologics. They doubled their investments from $150 million by converting the loan they had given to Biocon Ltd to invest in Biocon Biologics to the tune of $150 million. So, that became a $300 million total investment in Biocon Biologics. Regarding the exit for our investors, I think they are in for a long run. They are reputed investors and very connected with how we are looking to grow this business. Obviously for any investor, an exit would be a liquidity event and that liquidity event is the IPO. It is something that we will discuss shortly once we get past the integration of some of the major markets we have acquired from Viatris. 

Can you give us a timeline for that? When do you expect the integration process to be over?

We will be looking at absorbing value in the biologics business. Biocon has incubated several businesses over the years. Biologics is the business that we invested and incubated for years. Now, we have that absorbing opportunity. We weren’t expecting Viatris acquisition. It certainly was an opportunity and we are looking to complete that acquisition and integrate into Biocon Biologics. Once we are past that, I will be in a better position to give clarity on timing and size of such a liquidity event. We have a two-year TSA (transition services agreement) with Viatris and they will continue to provide us services for two years from November 2022. We are looking to see if we can accelerate the transition. As our business and our commercial set up get ready, we will exit from the TSA and will take more control of the business. It could happen sooner than two years.

What is your capex plan for FY24?

Most of our capex investments for monoclonal antibodies (mAbs) are behind us. So, we don’t see making much investments on this. On the insulin front, we are currently in an investment phase. We are seeing huge demand for our insulin products. We are in the process of expanding our insulin facility and we see capex investments to the tune of $150 million a year over the next couple of years. In FY23, we had 35 product launches in different markets and we continue to see that this year as well.  

Are you looking at diluting further stake in BBL to reduce debt as your overall debt was around $1.5 billion?

At Biocon Biologics, we had a debt of $1.5 billion and from an acquisition perspective, the debt was $1.2 billion. We have been able to consciously move forward to reduce that debt. We have recently raised funds from Edelweiss of around $100 million.

Insulin prices are under pressure in global markets (eg, Eli Lilly taking price cuts). On top of that, insulin products also have high rebates. Biocon’s interchangeable Semglee was launched in both branded and unbranded forms; is the going getting tough in the insulin space?

From our perspective, we have operated with a high band and a lower band model. We believe that we can cater to all stakeholders in the US system. We are not expecting much of a pricing pressure. We see that much of this revision is a reaction to the guidance of the Act, which is the IRA or Inflation Reduction Act. This will lead to capping insulin’s out-of-pocket cost to $35.