Eris buys India formulation biz of Biocon Biologics for Rs 1,242 crore

The deal would enable Eris' entry into the Rs 3k cr injectables market, and it would become one of major players in the insulins segment with the acquisition of Biocon Biologic's Basalog and Insugen

Eris Lifesciences, a chronic therapy-focused drug firm, has acquired the India-branded formulation business of Biocon Biologics, a subsidiary of Biocon, for Rs 1,242 crore. This includes portfolios in insulin, oncology, and critical care.

The transaction value represents an accretive multiple of 3.4 times revenue and 18 times earnings before interest, tax, depreciation, and amortisation.

As part of the deal, over 430 employees associated with the business are expected to transition to Eris, Biocon Biologics said.

“Biocon Biologics has signed a 10-year supply agreement with Eris as part of this deal. The transaction is expected to take effect on April 1, 2024, subject to customary closing conditions,” it added.

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The deal would enable Eris to enter the Rs 30,000 crore injectable market, positioning it as a major player in the insulin segment with the acquisition of Biocon Biologics’ Basalog and Insugen.

It also marks Eris’ entry into oncology and critical care.

On the other hand, Biocon Biologics said that this collaboration lines up with its strategy to “unlock value from its legacy business of branded formulations built over the past two decades”.

“As part of this collaboration, Biocon Biologics will continue to leverage Eris’ strong commercial footprint to significantly expand patient access to its world-class biosimilars in India,” the company said.

Krishnakumar Vaidyanathan, executive director and chief operating officer of Eris Lifesciences, said that the supply contract includes provisions for technology transfer, allowing Eris to evaluate in-house manufacturing in the future.

He added that following this acquisition, Eris would have a debt of Rs 3,000 crore on its balance sheet, and it is comfortably positioned to service the debt as well as make principal repayments through its strong cash flows.

The portfolio size is in the region of Rs 360 crore, Krishnakumar said.

Biocon Biologics’ Basalog and Insugen are the largest Indian brands in their respective segments, with market shares of over 10 per cent.

This acquisition will expand Eris’ diabetes franchise to around Rs 1,000 crore.

The turnover of the two insulins is around Rs 200 crore, while Eris’ insulin portfolio currently stands at around Rs 50 crore.

The oncology portfolio has a turnover of Rs 80 crore, and the critical care segment has a turnover of Rs 80 crore, Vaidyanathan said, underscoring the potential for major expansion in these portfolios through further clinical trials for additional indications.

Amit Bakshi, chairman and managing director (MD) of Eris Lifesciences, said, “This deal, combined with the acquisition of Swiss Parenterals announced last month, will turbocharge our entry into the Rs 30,000-plus crore India-branded injectable market and pave the way for our next Rs 1,000 crore vertical in the next three to four years. Over the past two years, we have added several strategic growth engines to our portfolio, and now we have all the building blocks in place to achieve our target of Rs 5,000 crore in revenue over the next three to four years.”

Meanwhile, Shreehas Tambe, chief executive officer and MD of Biocon Biologics, commented: “This strategic collaboration with Eris Lifesciences for our portfolio of metabolics, oncology, and critical care products in India aligns with our commercial strategy to maximise patient reach and market potential. It builds on the success of our existing partnership with Eris for our nephrology and dermatology products and will allow us to deliver our high-quality, life-saving biosimilars to millions of patients in India.”

As of the third quarter of 2023–24, Biocon Biologics’ net debt was $1.2 billion. The company has been making efforts towards debt reduction and has stated that strengthening its balance sheet remains a key focus.

Key deal highlights
 

•  Eris has signed a 10-year supply agreement with Biocon Biologics as part of this deal
   
•  The scope of the acquisition includes Biocon’s Insulin, Critical Care and Oncology portfolios
   
•  Over 435 employees (including 325+ MRs) are expected to transition from Biocon to Eris pursuant to the deal
   
•  The deal will be funded through debt financing
   
•  The transaction is expected to achieve financial closure before 15 April, 2024