Biocon Q1FY20 Revenue grows by 25 per cent

Biocon has announced its consolidated financial results for the fiscal first quarter ended June 30, 2019. Commenting on the highlights, Chairperson and Managing Director, Kiran Mazumdar-Shaw stated, “Robust performance by our biologics and small molecules business segments fuelled the 25 per cent growth in Q1FY20 Revenue to Rs 1,490 crores. Our long-term investments in biosimilars are delivering expected results as demonstrated by the 96 per cent growth in our biologics revenue at Rs 490 crores this quarter, led by the expansion of our geographical footprint and increased penetration of our products in key developed and emerging markets. Small molecules revenue at Rs 480 crores was driven by steady API sales and a multi-fold growth in generic formulations. Our research services business continues to provide profitable growth. The consolidated EBITDA for Q1 stood at Rs 462 crores up by 51 per cent and Net Profit (excluding exceptional item) at Rs 223 crores grew by 86 per cent.

“We remain committed to develop high-quality bio-therapeutics and enable affordable access to patients across world markets”.

She also informed that in Q1FY20, the company’s consolidated revenue grew 25 per cent to Rs 1,490 crores from Rs 1,193 crores in Q1FY19, while the net profit (excluding exceptional item) stood at Rs 223 crores reporting a growth of 86 per cent. “Net Profit was impacted due to an exceptional item on account of tax on group entities restructuring,” she said.

Compared to Rs 120 crores in Q1FY19, the net profit of the company reported a growth of 72 per cent at Rs 206 crores, while the Earnings before Interest, Depreciation and Amortization (EBITDA) increased 51 per cent to Rs 462 crores, which was Rs 307 crores in Q1FY19. Shaw mentioned, “We reported a better quality of earnings this quarter as reflected in the consolidated EBITDA margin of 31 per cent in Q1FY20 (vs. 26 per cent in Q1FY19).”

She added, “Core EBITDA margin for Q1FY20 (net of licensing, impact of forex and R&D) stood at 36 per cent (vs. 27 per cent in Q1FY19). The net profit margin (excluding exceptional item) stood at 15 per cent. Net Profit margin stood at 14 per cent (vs. 10 per cent in Q1FY19). Net R&D expenses for the quarter at Rs 79 crores were up by 78 per cent (vs. Rs 44 crores in Q1FY19). Gross R&D expenses were Rs 110 crores, corresponding to 11 per cent of our revenue (excluding Syngene).”

Small molecules: APIs and generic formulations

The Small Molecules business reported a revenue growth of 20 per cent for the quarter at Rs 480 crores led by strong sales of Biocon’s key APIs and a robust performance of its generic formulations business. Its statins, immunosuppressants and specialty molecule APIs witnessed steady demand from customers in India, EU, LATAM, APAC, CIS and NAFTA regions. The firm also filed new Drug Master Files (DMF) for its specialty APIs in key regulated markets this quarter.

The generic formulations revenue grew multi-fold as the business built on its strong performance in the previous quarters, with Rosuvastatin and Simvastatin formulations maintaining their market shares, and recently introduced Atorvastatin registering good growth through the acquisition of key accounts in the US markets.

Biocon has also initiated a greenfield project in Visakhapatnam, Andhra Pradesh with an investment of Rs 600 crores to secure its anticipated growth in fermentation-derived APIs, including its strong portfolio of immunosuppresants. The expansion will enable the company to deliver on its vertically integrated strategy of developing and commercialising its own ANDAs and also service the needs of its global API customers. The facility is expected to be operational over the next three years followed by commercialisation based on regulatory approvals in major markets.

Biologics – Biosimilars and novels

The Biologics segment was the strongest performing segment in the quarter, reporting a 96 per cent revenue growth at Rs 490 crores, led by the expansion of biosimilars footprint in new markets and increased penetration of products already launched in some developed and emerging markets.

The encouraging trend of significant biosimilars adoption in both Europe and the US provides an opportunity for Biocon to increase penetration of its portfolio thus enabling wider patient access leading to a dominant market share, going forward. Fulphila, biosimilar pegfilgrastim co-developed by Biocon and Mylan reported strong sales this quarter recording a 21 per cent volume share of the Pegfilgrastim syringes market in the US till May 2019.

During the quarter, Ogivri, co-developed by Biocon and Mylan, was approved by Health Canada as the first biosimilar Trastuzumab to be approved in the country. The company also extended its geographic footprint in EU with the commercialisation of Ogivri (biosimilar Trastuzumab) thus expanding access to a high-quality biosimilar for breast and gastric cancer patients in these markets.

Its partner Mylan continues to commercialise Semglee, biosimilar Insulin Glargine, in EU which furthers Biocon’s mission to provide affordable insulin therapy to a larger patient pool in the region.

Mylan, which recently launched in-licensed biosimilar Adalimumab (Hulio) in Europe has extended the commercialisation rights for the biosimilar from Europe to global markets. Biocon retains its economic interest in this expanded in-licensing arrangement and will gain a share of profits from global markets.

Emerging Markets

The company witnessed robust sales of our biosimilar Trastuzumab, Insulin Glargine and rh-Insulin in key emerging markets in AFMET and LATAM regions. It also received regulatory approvals in some key emerging markets for biosimilar Trastuzumab and Insulin Glargine, which augurs well for the future.

Regulatory updates

Biocon received the certificate of GMP compliance from EMA for its manufacturing facilities for biologics drug product, including an additional manufacturing line, and drug substance facility at Biocon Park, Bengaluru, following an inspection by the European agency in March 2019. This certification will enable the company to continue addressing the growing needs of patients in the EU markets and enhance access to its high-quality biosimilars.

The US FDA pre-approval inspection of Biocon Malaysia’s Insulin Glargine drug substance, drug product and device assembly facilities resulted in 12 observations across the three units.

Branded Formulations

The Branded Formulations business, which includes sales in India and UAE, reported a de-growth of nine per cent at Rs 133 crores, as uncertainty in the UAE market continued to weigh down the overall performance of this segment.

In India, the company’s top 10 brands contributed 78 per cent to overall sales. In the UAE, the company’s business continued to be impacted due to re-pricing of branded generic products mandated by the Ministry of Health. On the other hand, CANHERA (biosimilar Trastuzumab) has captured a high-twenties share of the market for Trastuzumab in the UAE.

Research services: Syngene

Revenue from the research services business this quarter stood at Rs 421 crores driven by discovery services and dedicated R&D centre businesses. Overall, the company reported a modest four per cent growth.