Biocon’s current biosimilars pipeline through its own and partner launches has potential to generate $377 million in revenue from the US and Europe in 2020-21, they say. During the 12 months ended March 31, 2019, biologics revenue doubled to Rs 1,517 crore from a year before.
Kiran Mazumdar-Shaw, chairperson and managing director, had said in a recent earnings call: “Our biosimilars strategy has begun to deliver, with the start of monetisation of the pipeline in the developed markets of the US and the European Union. Launch of biosimilar Pegfilgrastim in the US and the ramp-up of sales of Trastuzumab in emerging markets were main contributors to this growth.” The company has both novel biologics and biosimilar molecules. These are expected to continue bringing growth in the segment.
In 2019-20, the company expects growth across business segments to continue, led by higher biosimilars revenues. While it expects the core margins percentage to sustain, research and development (R&D) expenses across business segments, and depreciation, would significantly increase.
“Further, in FY’20, our investment in human capital will also significantly increase, on account of setting up an organisational structure to support independent functioning of our biosimilars business under Biocon Biologics. We have also set up a Boston-based subsidiary, Bicara Therapeutics, to support our immune-oncology programmes. We expect these investments to augur well in pursuing our ambition of enabling access to affordable biologic therapies to patients worldwide, while establishing Biocon as a leading global player in biologics,” the CMD had added.
Biologics accounted for 27 per cent of total revenue in FY19 and the segment is expected to see a 46 per cent compound annual growth rate over FY19-21. Its contribution to overall revenue will go up to 44 per cent, says Shrikant Akolkar, analyst from Ashika Institutional Research.
With Mylan, through a partnership it entered in 2009, it has 11 biosimilars in oncology, diabetes and auto-immune diseases.
From another partnership with Sandoz, entered in 2018, it plans to develop an undisclosed number of biosimilars in oncology and immunology.
"The payback time for Biocon has started after years of R&D investment. Biocon now has two US and three European biosimilars’ approval. Additionally, through Mylan’s partnering, it also has two more biosimilars in its pipeline, which can provide strong thrust to revenue and profit after tax (PAT) in FY21/22. We forecast Biocon to report 25 per cent/45 per cent revenue/PAT over FY19-22. In our opinion, Biocon’s current biosimilar pipeline (own plus partners) has potential to generate $377 mn revenue from developed markets in FY21. If approvals come timely, the biosimilar revenue from developed markets can reach $0.5bn in FY22," went the report from Ashika.
Vishal Advani of Axis Securities, said: "We believe the increase in contribution from biologics will shore up the overall margins." They noted the business had grown significantly in the past three financial years. Primarily driven by the ramp-up of launches in regulated and emerging markets.
Vishal Manchanda, research analyst with Nirmal Bang Institutional Equities Research, said revenues and earnings should remain in a positive trajectory in the near to medium term. However, these would also face downside pressure from rising competitive intensity.
Biologics to boost Biocon business over the next 3 years, say analysts