Biocon is Asia’s premier biopharmaceutical company is driven by the vision to make a difference to global healthcare through improved access to high quality, life saving biotherapeutics by making them affordable for patience across the world. Company have evolved from manufacturing pharmaceuticals like statins and immunosuppresants, to discovering, developing and producing biologics in chronic therapies such as diabetes, oncology and immunology for global markets. This has translated into a diversified and differentiated pipeline of fermentation derived complex generics, biosimilars that include insulins and monoclonal antibodies and novel biologics. Biocon was among the early movers in industry to pursue a high risk strategy of developing biosimilars for global market. Through company’s made in India biosimilars business, Biocon seek to pursue a humanitarian path that will provide affordable access to high quality generic biologics to make a difference to diabetes, cancer and autoimmune diseases. Company has succeeded in bringing the benefit to high quality biosimilars to patients in India, other emerging countries like Latin America, Africa , Middle East & Turkey, Asia-Pacific regions and also now in developed markets of U.S, E.U and Japan. Company has built one of India’s largest bio-manufacturing facilities for insulins, monoclonal anibodies and devices. Biocon’s insulin manufacturing and R&D facility set up in Malaysia with an investment of USD 300 million is the largest integrated insulin facility in Asia. This is the largest foreign investment in biotechnology in Malaysia. Company has emerged as a highly innovative biopharmaceuticals enterprise that has benefited million of patients in over 120 countries. Around 70% of company’s revenue comes from foreign markets and 30% comes from domestic market. Biocon’s business is organized into four segments: a) small molecules API & Generic Formulations, b) Biologics – Biosimilars (Insulin, MAbs & other biologics) & Novel Biologics , c) Branded Formulations (Currently in India & UAE), d) research services (syngene). Biocon has focused on its core biotech capabilities in selecting its differentiated API portfolio largely comprising fermentation derived molecules such as statins, orlistat, immunosuppresants, and other speciality molecules. These are sold to third party customers who in turn formulate and sell the finished dosages in global markets including the U.S, Europe and large emerging markets. Since late 1990s, company have emerged as a preferred APIs partner for over 1,000 pharma companies in more than 100 countries and have long term business relationships with many of them. While APIs are certainly a part of the business opportunity, going forward , company’s small molecules business would increasingly focus on building on the generic formulation opportunity. To stay abreast of the ever growing competition in the generic business, company has chosen to focus on niche therapeutic areas such as oncology, diabetes, autoimmune diseases and immunosuuressants over the next few years.
API Sample Portfolio:
| Statins Basket | Simvastatin, Pravastatin, Atorvastatin, Rosuvastatin, & Fluvastatin |
| Immunosuppressants Basket | Tacrolimus, Sirolimus, Everolimus, Mycophenolate Mofetil & Mycophenolate Sodium |
| Other Key Products | Orlistat, Fidaxomicin |
Generic Formulations Sample Portfolio:
| Molecule | Status |
| Rosuvastatin | Launched – United States & EU |
| Simvastatin | Launched – United States |
| Atorvastatin | Launched – United States |
| Fingolimod | Tentative Approval (United States) |
| Pemetrexed | Tentative Approval (United States) |
The company’s small molecules segments returned to growth after registering a decline in the previous year. Last year, the segment had faced headwinds as a result of pricing pressure and channel consolidation faced by its clients in the United States. Current fiscal, the segment will record robust sales of core APIs to customers in Latin America, Europe and the Middle Eastern market coupled with increased supplies to India based customers catering to United States market. Company’s generic formulations business also delivered strong top line growth . Company successfully commercialized Atorvastatin and Simvastatin formulations in the United States and recorded market share gains in the previously launched Rosuvastatin formulations. More launches are expected over next 2-3 years by company, which cumulatively provides revenue growth visibility to this segment. Small molecules is the largest segment for the company, contributing 31% of consolidated revenues from operations in FY19. Revenues where Rs 17,728 mn in FY19 as compared to Rs 15,077 mn in FY18, a growth of 18%. The growth was driven by increased demand of its API sales in global markets aided by growth in the nascent generic formulations business in the U.S. As one of the earliest players in the realm of biologics in India, Biocon has created a rich pipeline of novel and biosimilars assets aimed at addressing local as well as global unmet medical needs associated with non-communicable disease. Biocon has one of the largest global biosimilars portfolios, spanning recombinant human insulin ( rh-Insulin), insulin analogs, monoclonal antibodies and other biologics for diabetes, oncology and immunology. Company have successfully commercialized several of its biosimilars in various markets across the globe. Company have partnered its biosimilar portfolio with global generic majors, Mylan and Sandoz, to develop a portfolio for global markets. Apart from biosimilars, company’s biologics strategy has a keen focus on developing a pipeline of innovative drugs. Company is the pioneer in developing, manufacturing and launching a couple of novel biologics in India, including antibodies like BIOMAb-EGFR, India’s first indigenously produced novel monoclonal antibody for the treatment for head and neck cancer. Company also launched ALZUMAb, the world’s first novel anti-CD6 monoclonal antibody, in India, for psorias. Biocon is the first global company to biologically and clinically validate CD6 as a target for autoimmune disease. Biocon has a co-developed collaboration with Mylan to develop 11 products. FY19 has been a landmark year for company’s biologics business segment, both for biosimilars as well as novel molecules. Company’s insulin portfolio gained share in several emerging markets such as Malaysia, Algeria and UAE. With company’s brand Insugen, company is a major player in the rh-insulin in Malaysia, holding 75% share in the local market. Company’s biosimilar Insulin glargine was also launched in South Korea through local partner under brand name Glarzia. In Europe , Mylan commercialized biosimilar Adalimumab in licensed from third party (Fujifilm Kyowa Kirin Biologics) in which Biocon receives economic benefit. In order to advance its market entry in Europe and certain other markets, biocon and Mylan agreed to a commercial arrangement between Mylan and a third party (Lupin) for an advanced stage Etanercept asset. Biocon retains its economic interest in this arrangement with Mylan, in accordance with its existing Etanercept collaboration agreement. In diabetes, Biocon’s Insulin Tregopil, is a first in class oral prandial insulin molecule for post-prandial glycaemic control.
Status of Biocon’s Global Biosimilar Portfolio:
| Therapeutic Area | Molecule | Status |
| Oncology | TRASTUZUMAB | Launched in EU & Emerging Markets. Approved in U.S. & Australia. |
| Oncology | PEGFILGRASTIM | Launched in the U.S. Approved in EU, Australia & Canada. |
| Oncology | BEVACIZUMAB | Launched in India. Global Phase III. |
| Oncology | FILGRASTIM | Preclinical |
| Oncology | PERTUZUMAB | Early Development |
| Diabetes | INSULIN GLARGINE 100 IU/ML | Launched in the EU, Japan# & Emerging Markets. Approved in Australia & New Zealand. Under review in U.S. |
| Diabetes | INSULIN GLARGINE 300 IU/ML | Early Development |
| Diabetes | INSULIN ASPART | Global Phase III |
| Diabetes | INSULIN LISPRO | Preclinical |
| Diabetes | RECOMBINANT HUMAN INSULIN | Launched in Emerging Markets. In active development for U.S. (partnered with Lab Pisa) |
| Autoimmune | ADALIMUMAB | Partner Mylan has launched in-licensed product Hulio® in EU. Biocon benefits from economic interest |
| Autoimmune | ETANERCEPT | Partner Mylan’s in-licensed product filed for approval in EU. Biocon retains economic interest |
| Oncology & Immunology | VARIOUS ASSETS | Early stage development |
Biocon’s branded Formulation business comprises product sold under the Biocon brand name in regional markets, currently in India and the UAE. This business focuses on speciality brands in critical therapies offering affordable and differentiated medicines of world class quality to thousands of patients in India and UAE. These include biologics (including biosimilars, novel molecules and others), in- licensed products and branded generics for acute and chronic conditions. The business focuses on therapeutic areas such as metabolic (diabetes, cardiovascular), oncology, nephrology, autoimmune diseases among others. In FY19 branded formulation segment grew 7% from Rs 6,115 mn to Rs 6,564 mn, led by good growth in Indian business, both in sales as well as profitability. As a speciality products company, 70% of company’s overall Indian business is now accounted for by biologics/biosimilars products. Key brands such as Insugen, Basalog, Erypro, Tacrograf and Psorid reported strong double digit growth in FY19. The top 10 brands in company’s branded formulation grew 15% and accounted for 78% of sales, up from 76% in previous year. Biocon is one of the strongest companies in India in the Insulin space with Basalog ranked as the number two Insulin Glargine brand in the country and Insugen retaining its position amongst the top 3 brands of Recombinant Human Insulin. Basalog sales grew 34%, while Insugen sales grew 21%, against the covered market gowth of 17% and 13% respectively. Company’s Oncotherapeutics portfolio continued to make a significant impact in realm of cancer care in India. CANMAb, its brand of biosimilar. Trastuzumab, continues to be ranked the No 1 Trastuzumab brand in the country, garnering a value market share of 27%. Sales performance of BioMab EGFR, company’s novel head and neck cancer antibody, benefitted from a new phase 3 data presentation at ASCO from controlled trial conducted at Tata Memorial Hospital, establishing the “best in class” status for this innovative therapy.
Worldwide Prescription Drug & OTC Sales by Therapy Area in 2024:
| Therapy Areas | WW sales 2017 (US$B) | WW sales 2024 (US$B) | CAGR (Growth) |
| Oncology | 104 | 233 | 12.2% |
| Anti-Diabetes | 46.1 | 59.5 | 3.7% |
| Anti- rheumatics | 55.7 | 56.7 | 0.2% |
| Vaccines | 27.7 | 44.6 | 7.1% |
| Anti-Virals | 42.4 | 39.9 | -0.9% |
| Immunosuppressants | 13.7 | 38.1 | 15.7% |
| Bronchodilators | 27.2 | 32.3 | 2.5% |
| Dermatoloticals | 12.9 | 30.3 | 13% |
| Sensory Organs | 21.6 | 26.9 | 3.2% |
| Anti-hypertensives | 23 | 24.4 | 0.8% |
| Anti-coagulants | 16.8 | 22.9 | 4.6% |
| MS Therapies | 22.7 | 21.5 | -0.8% |
| Anti-fibrinolytics | 12.7 | 20.4 | 7.1% |
| Anti-hyperlipidemics | 11.3 | 16.4 | 5.5% |
| Anti-anemics | 7.6 | 15.7 | 11% |
| Top 15 | 445 | 683 | 6.3% |
| Other | 379 | 567 | 5.9% |
| Total WW Prescription & OTC | 825 | 1,249 | 6.1% |
Worldwide prescription drug sales are expected to rise from US$ 900 billion in 2019 to US$ 1.2 trillion by 2024, with CAGR for pharmaceutical drugs expected to be 6.4% or six times the 1.2% over 2011-2017. Demographic change is driving demand for both preventive and therapeutic healthcare products. The world’s population is rising and more people are living longer. An ageing population and changes in society are contributing to steady increases in non-communicable disease (NCDs) with developing countries particularly affected as their population growth. These diseases include cancer and cardiovascular, metabolic and respiratory diseases often associated with lifestyle choices, including smoking, diet and lack of exercise. Greater understanding of the biology of human disease and the use of new technology and approaches is enabling to identify and develop novel targeted treatments. Oncology is expected to remain the dominant therapy segment, growing US$ 129 billions sales over 2017-2024, and reaching US$ 233 billion by 2024. Immunosuppressants are expected to have the highest CAGR gain during period 2017-2024, at 15.7%, followed by dermatological (13%), Oncology (12.2%) and anti anemic (11%). The global oncology biosimilars market was worth US$ 812 million in 2019. Cancer is a lifestyle disease that occurs due to the abnormal growth of cells and may result in the formation of tumor. The present most effective cancer treatments are based on biological drugs, also known as biologics, and include targeted therapies as well as immunotherapies. These drugs are produced using living organisms, including bacteria, yeast and animal or a plant cell. As a result, the cost of these drugs are relatively higher, which adds to the expense of cancer treatment. To lower the price of treatment, the interest in the development of biosimilars of branded oncology biologics has been increasing. These biosimilars are highly similar to the reference biologics in terms of effectiveness and safety and can help in significantly reducing the expenditure on cancer treatment due to their lower cost. The government authorities in numerous countries are promoting the uptake of biosimlars as a cost containment. The united states food and drug administration has developed information materials for physicians and patients to educate them about biosimilars. Besides this, oncology biosimlars can also increase industry competition, owing to which they have the potential to drive down the prices of biological drugs further. Some of the other growth-inducing factors for the market include approaching patent expiries of branded biologics and increasing research and development activities by biosimilar manufacturers. The global biosimilar market size is expected to reach a value of USD 61.47 billion by 2025. It is expected to expand at a CAGR of 34.2% over the forecast period. Major biological drugs are approaching the patent cliff. By 2025 several biologic patents will have expired in many countries, and this could translate into an opportunity to develop new biosimilars. Lower cost of biosimilars compared to patented biologics and positive outcomes in clinical trials are expected to boost market growth. Currently there is a boom in pharmaceutical industry for the development of biosimilar drugs which is cost saving alternative to biologic drugs. Billions of dollars are at stake for the branded pharmaceutical market due to patent expiration. This has led to strong push for the biosimilar manufacturers. In the U.S alone, the switch from branded to biosimilar drugs is likely to save between $40 and $250 billion in the next 10 years. Non-glycosylated proteins is the dominated biosimilars which holds over 60% of the global market. Recombinant Glycosylated proteins is expected to be the fastest growing market segment during 2019-2026 with a CAGR of 33.4%. Recombinant peptides segment was estimated to account for USD 501 million in 2018 and is expected to grow reach USD$ 4.38 billion by 2026. Asia pacific is expected to account for the 32.8% of the global biosimilars market. Developing nations such as China and India are likely to witness high growth. As many as nine drugs in the biological category have either gone off patent or will do so by 2025. Their total revenue was US$ 62 billion in 2018. This creates a major opportunity for their respective biosimilars. Biosimilars will be US$240 billion and Indian market will be over US$ 35 billion by 2032. Biocon earned Rs 1,517 crore or nearly 28% revenue from biosimilars in FY19. The price gap between biosimilars and underlying biologics has significantly widened to over 60% for some drug from just over 20% a few year ago. A wider price difference will help in faster adoption of biosimilars. India makes an incredible market in the biosimilars space. One of the first countries globally to get approval, marketing biosimilars is one aspect of its acclaimed position. Leaving behind the U.S by almost a decade, when the first biosimilar for hepatitis B was signaled in the country in 2000. The outreach of Indian biosimilar companies at present is limited. Companies are currently marketing their products only in emerging markets, but the next stop is U.S, the largest and most profitable market for pharmaceuticals has not opened up to most of these biosimilar drugs. With help of biosimilars treatment costs of several chronic and life threatening diseases such as rheumatoid arthritis and cancer have declined by 20-40%. Biocon’s biosimilars strategy has begun to deliver, with the start of monetization of the pipeline in the developed markets of the U.S and the European Union. Launch of pegfilgrastim in the U.S and the ramp-up of sales of Trastuzumab in emerging markets were main contribution for the growth. Biocon Ltd plans to sell insulin in low and middle income countries at a fraction of the current prices to achieve the US$ 1 billion annual sales target for its biologics business by 2021-2022. To achieve this target, the biologics subsidiary of Biocon has launched anti breast cancer biosimilar trastuzumab in U.S. and will launch insulin glargine in next 2-3 months. Biocon has 28 products in the pipeline, including insulin and oncology biosimilar bevacizumab. Biocon plans to supply recombinant human insulin to diabetes at less than 10 cents ( roughly Rs 7) from the $5 (Rs 350 ) currently in low and middle income countries. These countries contribute to 80% of the global diabetes burden. Biocon has launched Trastuzumab biosimilar ogivri in th U.S market. Ovigri is used to treat the breast cancer and gastric cancer and Biocon has regulatory approval to sell it in more than 80 countries worldwide. It is the second biosimilar from the partnered portfolio of Biocon and Mylan being commercialized in the U.S. company even has tie up with Sandoz. Biocon’s biosimilar segment has shown growth of more than 100%. The annual turnover for biosimilar molecules sold in domestic market as on December 2019 stood at Rs 1,498 crore, up 34% from Rs 1,117 crore in December 2016. India is predicted to be the one of the world’s fastest growing bio-hub in recent years. India’s growing biosimilars industry is the primary driver of growth, with respondents citing India’s rising domestic demand, bio investments, and the potential for increased exports to advanced markets. India has over 95 approved biosimilars in the domestic market more than any other country and market penetration, which is currently relatively low and is expected to increase quickly in coming years with the increase in demand by middle class. The department of Biotechnology of India in collaboration with world bank, initiated an industry academia collaborative mission National Bio-pharma mission with a corpus of USD 250 million which is implemented by BIRAC. Global small molecule API market will reach approximately USD 279.7 billion by 2027, registering 7% CAGR by 2030. Small molecule APIs are an important and highly effective component of the bio/ pharmaceutical portfolio seamlessly using small molecule API ensures speeding the drug development process and early phase trials. China has crackdown producers of APIs, the sector is on high alert for supply chain disruption. The crackdown is on basis on environmental issues. This will give boost to pharma companies of India which are manufacturing API. Indian pharmaceutical market is set to reach USD 76.7 billion by 2024. The global pharmaceutical industry will be worth USD 1.57 trillion by 2023. The global pharmaceutical contract manufacturing market is expected to grow from USD 92.83 billion in 2017 to USD 150.82 billion by 2025 at a CAGR of 5.35%. Biocon and Equillium has a collaboration and license agreement for itolizumab to grant the exclusive rights for developing and commercializing the products in Australia and New Zealand. Biocon and Mylan NV has collaboration and launch insulin glargine biosimilar semglee for the treatment of diabetes in Australia. True North will invest Rs 536.25 crore for a 2.44% minority stake in Biocon Biologics India, taking its value to Rs 21,450 crore, or around US$ 3 billion. This investment is crucial development for Biocon’s biosimilars subsidiary, given the high costs involved in developing biosimilars. By this company would get a benchmark valuation through some private equity investment before they take it to the market for an IPO. After demerging its biologic business, biocon will be the holding company of Biologic segment of biocon and it will produce API. And research segment syngene will get merged into Biocon’s biologic business. Biocon has acquired a Chennai based Research and Development facility from Pfizer healthcare India Ltd. The R&D is spread across 60,000 square feet and will around 250 scientists to develop biosimilars. Biocon has one of the largest portfolios of a biosimilar with successful partnership.
| Particulars | FY19 (Rs mn) (%) | FY18 (Rs mn) (%) |
| Small Molecules | 17,728 31 | 15,077 35 |
| Biologics | 15,169 27 | 7,702 17 |
| Branded Formulation | 6,564 12 | 6,115 14 |
| Research Services | 18,256 32 | 14,231 33 |
| Less: inter segment revenue | (2,573) (5) | (1,828) (4) |
| Revenue from operations | 55,144 | 41,297 |
| Other Income | 1,444 3 | 2,062 5 |
| Total Revenue | 56,588 | 43,359 |
Company’s consolidated revenue grew by 31% from Rs 43,359 mn to Rs 56,588 mn. The small molecules segment revenues increased 18%, as it benefited from the launch of generic formulation products in the U.S . The biologics segment revenues almost doubled, primary due to launch of biosimilar pegfilgrastim in the U.S by its partner Mylan and increased sales of Trastuzumab in emerging markets. Branded formulations segment grew 7% supported by sales growth in India while contract Research segment (Syngene) turnover grew 28% driven by discovery services and dedicated centres. The net R&D expenditure for FY19 increased 34% to Rs 2,899 million from Rs 2,158 million in FY18. Total spend was at 7% of revenue ex-syngene, similar to the previous year. Company capitalized Rs 1,897 mn, taking gross R&D spend to Rs 4,796 mn for the year compared to Rs 3,804 mn in FY18. The gross R&D spend increased due to higher spend in the biosimilar developments programs. In FY19 net profit soared 143% to Rs 9,053 million. Company’s three main business segment, small molecules, biologics and research services, crossed Rs 15 billion . FY 19 was a landmark year for the Biologics business segment, which reported a growth of 97% to Rs 15,169 million, thus emerging as a key driver for Biocon’s incremental growth. Company’s annual performance was also supported by a 28% growth in the Research services segment to Rs 18,256 mn and 18% growth in small molecules to Rs 17,728 mn. A higher share of biologics revenue in FY19, boosted profitability as reflected in the EBITDA margin of 27% for the full year despite a 34% increase in net R&D expenses on account of higher spends on biosimilars as well as the generic formulations programe. Company plans and continue to invest heavily in R&D for developing biosimilars. Company’s income from operations grew to Rs 5,514.40 crore in March 2019 from Rs 712.57 crore in March 2005. Company’s net profit grew to Rs 1,001.70 crore in March 2019 from Rs 197.54 crore in March 2005. In between this period company has never posted a loss. By all this I prefer buy call on BIOCON LTD at CMP of Rs 288.60 on 28 January, 2020.