Biocon
Multiple growth drivers
Mrs. Jill Deviprasad – Financial Communications & Investor Relations
shared her view on the industry and the company
Key Highlights
§ Biocon is an emerging biopharma company with strong foothold in the Insulin market
in India. Biocon is ranked 4th in the overall insulin space and 1st in the Glargine vial
market. Its has two subsidiaries - Clingene (clinical services) and Syngene (discovery
services)
§ Biocon is a leading player in statins and exports over 80% of its production,
commands over 20% global MS and derives 30% of its revenues from this business.
The company caters to regulated markets including US and Europe. The company
manufactures all four statins - Lovastatin, Simvastatin, Pravastatin and Atorvastatin.
Company is in talks to supply atorvastatin API to one of its partner post 180-days
exclusivity in the US market – this may bring huge upsides
§ Syngene has changed its business model from low risk fee based model which is
very volatile to sharing risk-reward model. We believe, on research front Syngene will
show better performance going forward and Clingene will take some time to
turnaround
§ Fidaxomicin supply to Optimer (exclusive supply contract) has already started in
June for US market. Biocon expects ramp-up to happen at a faster pace going ahead
§ Biocon has begun work on the Malaysian plant (expected to start operations by
2014) that will serve its deal with Pfizer. Investment of US$161mn is lined-up for
Phase I construction. Pfizer has launched insulin and Glargine in the Indian market
from Biocon’s portfolio under its own brand names - Univia and Glarvia. The total
payment that would accrue to Biocon are as follows
o Upfront Payment – USD100mn
o New mfg facility set up – USD100mn
o Development, regulatory & launch milestone payment – USD150mn
o Payments linked to supplies and sales
§ Biocon has signed a deal with Myaln for emerging markets, US & Europe for
supplying bio-similars (monoclonal antibodies). The total addressable market
opportunity is pegged at USD30bn for which a basket of products expiring between
2014-18 are being developed. Both the companies will share development and
capital costs. Mylan will have exclusive commercial rights in the regulated markets
and co-exclusive rights in other markets
§ Biocon is in talks to out license IN105, Anti CD6 and BVX20. Phase I study for
BVX20 is expected to start in Q1FY13. Currently ongoing phase III study in Psoriasis
is expected to be completed in Q4FY12 with the results likely to be available by
Q1FY13
Valuations
§ At current price, the stock trades at 18x FY11 EPS of Rs18 and 11X FY11
EV/EBITDA. Syngene listing has been delayed by almost a year, but these value
unlocking opportunities would remain a trigger in future
Multiple growth drivers
Mrs. Jill Deviprasad – Financial Communications & Investor Relations
shared her view on the industry and the company
Key Highlights
§ Biocon is an emerging biopharma company with strong foothold in the Insulin market
in India. Biocon is ranked 4th in the overall insulin space and 1st in the Glargine vial
market. Its has two subsidiaries - Clingene (clinical services) and Syngene (discovery
services)
§ Biocon is a leading player in statins and exports over 80% of its production,
commands over 20% global MS and derives 30% of its revenues from this business.
The company caters to regulated markets including US and Europe. The company
manufactures all four statins - Lovastatin, Simvastatin, Pravastatin and Atorvastatin.
Company is in talks to supply atorvastatin API to one of its partner post 180-days
exclusivity in the US market – this may bring huge upsides
§ Syngene has changed its business model from low risk fee based model which is
very volatile to sharing risk-reward model. We believe, on research front Syngene will
show better performance going forward and Clingene will take some time to
turnaround
§ Fidaxomicin supply to Optimer (exclusive supply contract) has already started in
June for US market. Biocon expects ramp-up to happen at a faster pace going ahead
§ Biocon has begun work on the Malaysian plant (expected to start operations by
2014) that will serve its deal with Pfizer. Investment of US$161mn is lined-up for
Phase I construction. Pfizer has launched insulin and Glargine in the Indian market
from Biocon’s portfolio under its own brand names - Univia and Glarvia. The total
payment that would accrue to Biocon are as follows
o Upfront Payment – USD100mn
o New mfg facility set up – USD100mn
o Development, regulatory & launch milestone payment – USD150mn
o Payments linked to supplies and sales
§ Biocon has signed a deal with Myaln for emerging markets, US & Europe for
supplying bio-similars (monoclonal antibodies). The total addressable market
opportunity is pegged at USD30bn for which a basket of products expiring between
2014-18 are being developed. Both the companies will share development and
capital costs. Mylan will have exclusive commercial rights in the regulated markets
and co-exclusive rights in other markets
§ Biocon is in talks to out license IN105, Anti CD6 and BVX20. Phase I study for
BVX20 is expected to start in Q1FY13. Currently ongoing phase III study in Psoriasis
is expected to be completed in Q4FY12 with the results likely to be available by
Q1FY13
Valuations
§ At current price, the stock trades at 18x FY11 EPS of Rs18 and 11X FY11
EV/EBITDA. Syngene listing has been delayed by almost a year, but these value
unlocking opportunities would remain a trigger in future
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