Serum Institute of India doubles Biocon investment to $300 million

Vaccine maker Serum Institute of India (SII) subsidiary Serum Institute Life Sciences (SILS) has decided to double its investment in Biocon arm Biocon Biologics (BBL) to $300 million.

The earlier investment by SILS in BBL was at a valuation of $4.9 billion, and the fresh $150-million investment pushes it up at $6 billion.

Kiran Mazumdar-Shaw, executive chairperson of BBL, said the investment in BBL is being done at a $6-billion valuation. “The deal will include the complete portfolio of Serum’s vaccines — the Covid-19 vaccines and also the other non-Covid vaccines under development,” she said.

Adar Poonawalla, CEO of SII, said they will hold close to 5 per cent stake in BBL and they “respect and admire” the business that BBL has built. He added that $300 million is the largest investment that Serum has made so far in any strategic alliance.

Poonawalla clarified that he is not exercising the right to have a board seat at this moment due to his pre-occupations. “I may exercise the right some time later,” he added. Poonawalla also said they are looking at a 15-year horizon with BBL, and are looking at it for the long term. He did not wish to comment on whether he would increase his stake in the recent future.

He said the company has struck a profit-sharing agreement with Biocon Biologics, depending on the vaccination made. Poonawalla expects that the company will see revenue and EBITDA coming out of this deal in a year’s time.

BBL said in an exchange notification that both companies have reached an agreement to withdraw from the original equity structure contemplated under their strategic alliance announced in September 2021. According to the new terms of the strategic alliance, SILS will make an additional equity investment of $150 million through the conversion of the $150-million loan provided to Biocon Pharma Limited, a wholly owned subsidiary of Biocon Limited, into equity in Biocon Biologics.

“This investment is in addition to the $150 million that SILS had invested in Biocon Biologics in November 2022, resulting in SILS’ aggregate equity investment in Biocon Biologics, amounting to $300 million,” BBL said in a statement.

BBL will have access to 100 million doses of vaccines annually together with the distribution rights to Serum’s Vaccine portfolio which will add to BBL’s product portfolio for global markets.

While Biocon Biologics had received approval from the National Company Law Tribunal (NCLT) in Karnataka, SILS was awaiting approval from the NCLT in Maharashtra to complete the merger. This would have provided SILS an equity stake in Biocon Biologics.

“The new terms will serve the objectives of both companies, as it provides SILS an aggregated equity investment in Biocon Biologics amounting to $300 million and provides Biocon Biologics additional product offerings for global markets,” Biocon said.