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Biocon Ltd.

BSE: 532523 Sector: Health care
BSE 00:00 | 22 Jun 628.45 8.35






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OPEN 624.00
VOLUME 134152
52-Week high 695.00
52-Week low 305.00
P/E 157.90
Mkt Cap.(Rs cr) 37,707
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 624.00
CLOSE 620.10
VOLUME 134152
52-Week high 695.00
52-Week low 305.00
P/E 157.90
Mkt Cap.(Rs cr) 37,707
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Biocon Ltd. (BIOCON) - Chairman Speech

Company chairman speech

Kiran mazumdar-shaw Chairperson

Dear Shareholders

The Era of Biologics

The global pharmaceuticals industry is witnessing transformative change. Biologic drugsor protein therapeutics like antibodies interleukins and vaccines derived from microbialand mammalian cells have ushered in a paradigm shift in treating chronic diseases.Targeted therapies and precision medicine are poised to disrupt the future of diseasemanagement.

The Indian pharmaceuticals sector built global scale and leadership by reverseengineering expensive chemically synthesized small molecule drugs to produce costeffective generic alternatives. In doing so it earned the label of being the‘Pharmacy of the World'. After dominating the traditional generic drugs industry fordecades many Indian companies are now in the race to create generic versions of biologicdrugs or biosimilars which are far more complex to make but offer a large globalopportunity.

Biocon is ahead in the pursuit to develop the first wave of biosimilars for globalmarkets and expand access to a number of essential and lifesaving biologic drugs that arefacing patent expiry. We are also developing a pipeline of patentedered a biologics toaddress unmet medical needs.


*Genetic Engineering & Biotechnology News #Evaluate Pharma World Preview 2016.

It is noteworthy that 10 of the Top 15 drugs by sales in 2016 were biologics* and it isforecast that by 2022 biologics will contribute up to 50% of the value of the Top 100 drugproducts sold globally#. Global sales of biotechnology drugs are projected to grow to USD337 billion# by 2022.

Getting ‘Ahead of the Curve'

At the turn of the millennium Biocon chose to embark on a biologics-led pharmaceuticaljourney with a differentiated business strategy. We invested ‘ahead of the curve' inthe promising future of targeted biologics that are revolutionizing the treatment ofchronic diseases. We recognized that for a company of our size it was an audacious plan.We took the plunge because we believed it would provide us with a head start in anovercrowded generics market place. We decided to take on the complex developmentmanufacturing and regulatory challenges inherent to biologics as we were confident of ourcapabilities. This stemmed from our knowledge and expertize in enzyme technology withwhich we started our biotechnology business. We pursued an innovationstrategyrootedinaffordability by leveraging India's cost base and set out to address theunfolding opportunities. By choosing to lead rather than follow we have been able totransform scientific discoveries into advances in human healthcare and generateincremental value for our shareholders.

Biologics: At the Cutting Edge

In 2006 Biocon earned the distinction of being the first company in India to launch anovel biologic Nimotuzumab a humanized anti-EGFR (epidermal growth factor receptor)monoclonal antibody (mAb) for head & neck cancer patients.

We followed up with the launch of our second novel biologic Itolizumab in 2013 forpsoriasis patients in India. This was a path-breaking anti-CD6 mAb less aggressive dosingregimen and a longer treatment free that period.

We had entered into a co-development partnership with US-based Mylan for a portfolio ofbiosimilars in 2009. This collaboration led to the launch of the world's first biosimilarTrastuzumab in 2014. Patients suffering from

HER2-positive metastatic breast cancer in India gained access to an affordable versionof this lifesaving drug when the rest of the emerging world only had recourse to theexpensive innovator product.

Biocon and Mylan have one of the longest-standing partnerships in the globalbiosimilars space. We have leveraged our mutual strengths to build one of the largest andmost diverse biosimilar pipelines spanning insulin analogs and monoclonal antibodies.

First off the Blocks

As early movers in the biosimilars space we have put three of our advanced biosimilarassets on track for anticipated regulatory approvals in developed markets. These addressan aggregate market opportunity of USD 20 billion.

During FY17 we filed two Biologics License Applications (BLAs) in the US and threeMarketing Authorization Applications (MAAs) in EU. egulatory Wewerethefirsttofileapplications for a proposed biosimilar of Trastuzumab in both the US and EU. This haspositioned Biocon and Mylan among the first companies to be able to address the criticalneed for a high-quality biosimilar to treat certain HER2-positive breast cancers inthe US and EU.

Our applications for biosimilar Pegfilgrastim have also been accepted for reviewin the US and EU.

We submitted a Marketing Authorization Application for our biosimilar Bevacizumab withthe Indian drug regulator after completing an emerging market-targeted India clinicaltrial. The MAA has recently been granted.

The global clinical trials for our biosimilar Adalimumab in plaque psoriasis have beencompleted. We expect regulatory submissions in various geographies to start in FY18.

Our biosimilars development capability was endorsed this year with the publication ofthe HERITAGE study by the prestigious Journal of the American Medical Association(JAMA). The study results confirmed the efficacy safety and immunogenicity of theproposed biosimilar Trastuzumab co-developed by Biocon and Mylan in comparison to thereference product.

The presentations of the study results at the American Society of Clinical Oncology(ASCO) Annual Meeting in Chicago US and the European Society for Medical Oncology (ESMO)Congress in Copenhagen Denmark in 2016 by Dr. Hope Rugo were appreciated immensely by thescientific community.

Consolidating Market Leadership

We have built market leadership in insulins on the back of our global manufacturingscale. We are now moving steadfastly towards our aspiration of providing our insulins to‘one in five' insulin-dependent people with diabetes around the world.

We achieved a key milestone in our journey towards this visionary goal when we launchedour ready-to-use disposable Insulin Glargine pen in Japan through our partner FUJIFILMPharma. Our Insulin Glargine is the first biosimilar from India to be launched in Japan.It is also our developed market. The confidence our product has gained among prescribersand patients in Japan has endorsed the quality and efficacy of our product and enhancedBrand Biocon's reputation across the world.

We also started commercial supplies from our first overseas insulins manufacturingfacility in Malaysia this year. Our recombinant human insulin (rh-insulin) becameMalaysia's first locally manufactured biosimilar product to be sold in theSoutheast Asian nation after we signed a three-year

MYR 300 million Off-Take Agreement with the Malaysian government.

We are looking forward to our insulins foray into larger developed markets followingthe submission and acceptance of our filings for Insulin Glargine with the EuropeanMedicines Agency (EMA) and the US FDA.

The commercialization of the Malaysia facility in FY17 will strengthen our positionamong the Top 3 biosimilar players globally for insulins#.

#in terms of volume market share-Units (Source: IMS Year End 2016)

Novel Molecules: Poised for the Leap

As practitioners of frontier science we have built a pipeline of novel biologics toaddress local as well as global unmet medical needs in diabetes cancer and autoimmunediseases. The basket of novel assets under clinical development represents an interestingcombination of early and advanced stage assets.

We believeInsulinTregopila‘first-in-class' oral prandial insulin is the mostadvanced program in the global oral insulin space and promises to transform diabetesmanagement. We have set the stage for pivotal studies with Insulin populations Tregopilin India which will form the foundation of a broad global program envisioned for thisnovel molecular entity.

The successful journey of Itolizumab from the laboratory to the market in India has putus ahead in the race to unlock the potential of its unique mechanism of action in multipleautoimmune indications. In FY17 we reported encouraging progress in our tests with apatient-friendly subcutaneous form of Itolizumab.

Small Molecules: Enabling Partners

The significant brand equity that we have built worldwide for our fermentation-derivedsmall molecule APIs across statins immunosuppresants and other specialty products hasmade us a leading global supplier of these products. We built on this reputation to emergeamong the first wave of suppliers of Rosuvastatin API to our partners for the US launchupon patent expiry in 2016. During the year we received our first generic formulationapproval for Rosuvastatin Calcium from the US FDA.

To become a vertically integrated player in the niche space of difficult-to-makegeneric formulations we have leveraged our strengths in fermentation technology andmolecular characterization.

Branded Formulations: India & UAE

We initiated our Branded Formulations business in India in 2004 with the stindigenously developed rh-Insulin which brought fir launchofthecountry's down the cost ofinsulin therapy by a third. Since then we have aimed at staying ‘ahead of the curve'by deftly balancing innovation and affordability with an intent to bring cost-effectivebiologics and differentiated small molecule formulations for chronic conditions topatients in India UAE and other select markets.

This year the business reported an overall growth of 24% on a like to like basis thissegment was down marginally compared to last year. Though sales in India were sluggish wecontinued to improve prescription share for some of our key brands such as InsugenBasalog and CANMAb™. Our robust growth in UAE placed us among the Top 15 pharmacompanies this year with most of our products ranked among the Top 5 brands in theirrespective segments.

The recently announced leadership changes across our India Branded Formulationsbusiness will provide us the ability to pursue a strong growth trajectory.

Syngene: Integrated Research Services Provider

Syngene our Research Services subsidiary is the only publicly listed Contract

Research Organization (CRO) in India that offers end-to-end drug discovery anddevelopment services for novel molecular entities to the global life sciences sector. As afront runner in the contract research space Syngene further expanded its role in FY17 asan ‘innovation partner' through new strategic partnerships with Amgen and HerbalifeNutrition with dedicated R&D centers.

In December 2016 a fire accident at one of Syngene's research blocks in Bengaluruaffected the strong revenue momentum of the business. Syngene's value proposition to itscustomers remains strong as it expanded its capacities and acquired new capabilitiesduring the year. An important acquisition to this effect was that of a bioinformaticsbusiness from a Bengaluru based genomics company Strand Lifesciences. On a standalonebasis it reported a revenue growth of 14% with a healthy EBITDA margin.

Quality: Unwavering Focus

A culture of quality excellence has helped Biocon maintain a strong compliance trackrecord in regulatory inspections over the years. During FY17 we underwent multipleregulatory audits from various international regulators.

Best Employer Brand

We continue to be the only Asian company on the Global Best Biotech Employers listbrought out by the prestigious Science Careers magazine which I believe is a greattestament to our work culture and the opportunities our scientists get within the company.In 2016 we featured among the Top 10 employers globally.

Financial Highlights

We matched our operational performance in FY17 with an equally strong financialperformance. We grew our topline by 18% toH40787 million while simultaneously improvingthe quality of our earnings. Our EBITDA margin for the year expanded to 28% from 24% ayear ago. Adjusting for the exceptional item that boosted the bottomline in FY16 NetProfit for FY17 jumped 54% to H6199 million.

Declaration of Bonus Shares & Final Dividend

The Board of Directors of the Company has recommended the issue of two bonus shares forevery one share held in Biocon which has been subsequently approved by the shareholders.The Board also recommended a final dividend of H3/- per share for FY17 (pre bonus) whichworks out to be H1/- per share post approval.

Being Socially Responsible

We strongly believe that the use of technology can address several challengesassociated with public health delivery in our country. Biocon Foundation the CSR arm ofBiocon has taken ahead this belief to develop a unique e-healthcare model and introducedeLAJ Smart Clinics a few years ago.

These clinics are designed to facilitate effective preventive and primary healthcareintervention in the rural areas of India for the benefit of communities with poor accessto healthcare. The foundation currently runs 14 eLAJ Smart Clinics covering over 30 grampanchayats across Karnataka and Rajasthan.

Through the eLAJ Smart Clinics we are paving the way for evidence-based public healthinterventions in these locations by enabling multiple diagnostic tests and generation ofElectronic Medical Records (EMRs) of patients. Over the past year patient footfall ateLAJ clinics has gone up by 50% to more than 9000 a month.

The eLAJ model is facilitating on-time treatment helping reduce out-of-pockethealthcare spending and cutting down the need for trips to tertiary hospitals which is inline with our commitment to enable the ‘Right to Healthcare' for every citizen.

Biocon Academy our one-of-a-kind initiative in the area of skills developmentdelivered on its commitment to prepare industry-ready students for the biotech sector.FY17 saw the successful completion of three batches of the Biocon KGI CertificateProgramin Biosciences and the second batch of the BITS

Biocon Program in Applied Industrial Microbiology. The Academy maintained a 100%placement record this year too even as more than 35 companies visited it for recruitingfresh talent. More than 60% of our students are being employed outside of Biocon andSyngene.

Looking Ahead

FY18 promises to be an exciting year for Biocon as some of the developed marketregulatory submissions for our biosimilars could translate into marketing approvalsopening up immense growth opportunities for the Company.

Finally I would like to thank our shareholders for the trust they have placed in us.We are in a humanitarian business of making a difference to people's lives. It is thismission that has spurred us on to fight our way through years of credibility challengesand market skepticism and emerge as the leading Indian company working in the cutting-edgesphere of biosimilars.

Best Wishes

Kiran Mazumdar-Shaw

Chairperson & Managing Director

June 8 2017