Biocon Ltd – Blockbuster for Biologics, Biosimilars & Branded Formulations

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Written By: Shuchi Nahar | Shuchi’s Blog | Linkedin Profile

Biocon Ltd – Company Overview

Biocon is an Indian biopharmaceutical company based in Bangalore, India established as a joint venture between Ms. Kiran Mazumdar-Shaw and Biocon Biochemicals Limited, an Ireland-based multinational.

The Company manufactures generic active pharmaceutical ingredients (APIs) that are sold in over 120 countries across the globe, including the developed markets of the United States and Europe.

It also manufactures novel biologics, as well as, biosimilar insulins and antibodies, which are sold in India as branded formulations.

Biocon’s biosimilar products are also sold in both bulk and formulation forms in several emerging markets.

In research services, Syngene International Limited (Syngene), a publicly listed subsidiary of Biocon, is engaged in the business of integrated end-to-end drug discovery and development services.

Biocon Ltd - 4 A's of Biocon
Biocon Ltd – 4 A’s of Biocon

Biocon’s business is organized into the following reporting segments:

  • Small Molecules API & Generic Formulations
  • Biologics – Biosimilars (Insulins, MAbs & other Biologics) & Novel Biologics
  • Branded Formulations (Currently India & UAE)
  • Research Services (Syngene)

 

Revenue Growth Trend over the past few years

Biocon Ltd - Revenue Growth Trend
Biocon Ltd – Revenue Growth Trend

 

Segment-wise Revenue Distribution

Biocon Ltd - Segment Wise Revenue Breakup
Biocon Ltd – Segment Wise Revenue Breakup

Small Molecules

  • Small molecules are the largest segment for the Company, contributing 32% of consolidated revenues from operations in FY20. 
  • Revenues were R 20,937 mn in FY20, as compared to R 17,728 mn in FY19, reflecting a growth of 18%.

Biologics

  • This year saw the biologics segment deliver an encouraging performance and once again being the strongest performing segment for Biocon, with revenues growing 29% over last year to R 19,513 mn, representing 30% of consolidated revenues from operations. 
  • Growth was led by higher revenues from Pegfilgrastim in the United States and Trastuzumab in developed markets. 

Branded Formulations

  • In FY20, the Branded Formulations segment revenues declined 18% from R 6,564 mn to Rs. 5,362 mn due to subdued growth in India and the UAE. 
  • The UAE business continues to be impacted by the re-pricing of branded generic products mandated by the Ministry of Health.

Research Business

  • Biocon’s contract research organization (CRO) arm Syngene contributes 31% of total revenues. The company caters to 362 clients including eight out of the global top 10 global players. 
  • It has signed a voluntary license agreement with Gilead to manufacture and supply Remdesivir in India and 127 other countries and indigenously developed an ELISA testing kit, has been outsourced to a partner for manufacturing and distribution across the country.
  • 362 active marquee clients across multiple sectors World-class R&D and manufacturing infrastructure spread over 1.5 million sq. ft 5000* strong pool of employees, 4,240 scientists.
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R&D Expenditure of Biocon Ltd

  • The net R&D expenditure for FY20 increased by 52% to Rs 4,394 mn (R 2,899 mn in FY19). Total spending was at ~10% (8% on FY19) of revenue ex-Syngene. 
  • The company capitalized Rs 877 mn, taking gross R&D spend to R5,271 mn for the year compared to R 4,796 mn in FY19.
  • The gross R&D spend increased due to higher spend in the biosimilar development programs, ANDA programs, and expenditures related to in-house novel programs. 
  • Gross R&D – 142 crore ( 107 in P&L), higher due to spending in biosimilar pipeline. R&D: Gross – 14-15% of sales, Net (P&L) – 11-12% of sales (exSyngene).
Biocon Ltd - Gross R&D Spend
Biocon Ltd – Gross R&D Spend

Key Achievements in FY2020

  • 20 Billion – Key annual revenue milestone crossed for the first time in FY20
  • 6 Billion – Investment in setting up a greenfield manufacturing facility in Visakhapatnam
  • US 127 Billion – A combined value of drugs for which patents will expire between 2020 and 2023
  • 280 – Patents obtained by Small Molecules business
  • 800 MT – Cumulative weight of APIs supplied globally

Novel Biologics

  • These therapeutics span across multiple modalities – including recombinant proteins, novel fusion antibodies, and monoclonal antibodies (mAbs).
  • BIOMAb EGFR® (Nimotuzumab) was India’s first indigenously produced novel monoclonal antibody for the treatment of head and neck cancer, launched by Biocon in 2006.
  • The company also launched ALZUMAb™ (Itolizumab), the world’s first novel anti-CD6 monoclonal antibody, in India, for psoriasis in 2013. It was the second novel biologic Company had taken from ‘lab to market’ after Nimotuzumab.

Biocon Ltd is on track to reach its long-term targets

Management is sticking to the earlier revenue target of USD 1 bn by FY22 for the biologics business on the back of the current portfolio as well as the forthcoming launches.

The company is also on track with the development of Insulin as part of global markets.

Biocon biosimilars regulatory approvals & providing access to more affordable biosimilars in over 120 countries

  1. Trastuzumab – 60 countries
  2. Pegfilgrastim – 36 countries
  3. Insulin Glargine -60 countries
  4. RH-Insulin – 40 countries
  5. Bevacizumab – 2 countries
  6. Adalimumab & Etanercept – Economic Interest
  7. Further Mylan plans to launch Bevacizumab in Europe in the latter part of the year BLA for Bevacizumab has already been filed in the US. 
  8. Biocon Ltd is targeting to have 8 different biosimilars to be sold by FY22 thereby addressing a market size of USD 33bn, further the company is planning to deliver at least 3 additional molecules between FY23 and FY25.
  9. Only Indian Biopharma plays to enter highly regulated markets like Japan and the US.
  10. March 2016 was an important milestone for Biocon as PMDA (Japan) approved Insulin glargine.
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Employee Expansion Trend over the Years

The company continued to invest in development for employees delivering more than 60,000 hours of training during the year. 

Geographic Expansion into China

  • Biocon Ltd extended its footprint to China, the world’s 2nd largest pharma market through a license and supply agreement with a subsidiary of China Medical System Holdings Limited (CMS) for three generic formulations products.
  • This agreement will allow Biocon Ltd to take its US approved generic formulations to patients in China, allowing an early entry into the Chinese market. 
  • Licensed out 3 Generic Formulations products to China Medical System Holdings (CMS. Biocon Ltd will develop & manufacture while CMS will Commercialize Aim to address a Market Opportunity of US$ 0.8 Bn

API Capacity Expansion of Biocon Ltd

  • During FY20, Company started work on a greenfield fermentation-based manufacturing facility in Visakhapatnam, Andhra Pradesh to cater to strong volume growth anticipated in the small molecules APIs business. 
  • This expansion will enable us to deliver on the vertically integrated strategy of developing and commercializing their own ANDAs and also service the needs of their global API customers. 
  • The expected investment in this capacity is roughly R 600 Crores and the facility is expected to be operational over the next three years.

DMF and API Filings

During the year under review, the company filed new Drug Master Files (DMFs) and equivalent for multiple APIs, mostly in the regulated markets.

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Generics Growth Steady

  • The generics segment (34% of FY20 total revenue) comprises APIs like statins, immunosuppressants, specialty APIs & also includes generic formulations business. The company is exploring fewer opportunities but with higher profitability in this segment. 
  • The company expects the generics segment to grow at a CAGR ~14% CAGR to 2882 crore in FY20-22E.
  • Partnered with DKSH for commercializing 7 generics in Singapore & Thailand. 
  • Biosimilar growth is driven by strong demand in most of the world (MoW) markets such as LatAm and AFMET+ deferred sales + stable US & Europe sales.

Ogivri – Positive market share trend in the US in Q1FY21 (mid-single digits market share).

Fulphilia – launched in several key countries in Europe, stable US market share (~6% market share) in the US.

Bevacizumab – under review with USFDA (US) & EMA (Europe)

Etanercept – to be launched in H2FY21 in Europe

Humira (Hulio) – partner Mylan received USFDA approval.

  1. a) On track development (with Mylan) for Insulin Aspart
  2. b) Continue rh-insulin development under 352(k) pathway
  3. c) Insulin glargine (Semglee) to be launched soon
  4. d) Partnered with Voluntis for Insulia – digital therapeutic solution (USFDA approved) to manage Type-2 diabetes treatment.

At least 8 biosimilars – Trastuzumab, Pegfilgrastim, Adalimumab, Bevacizumab, Etanercept, Insulin Glargine, Insulin Aspart, and rhInsulin to be available in developed markets by FY22 end (market size of US$ 33 billion) FY23-25: three molecules to be launched.

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Branded Formulations

  • Comprehensive offering of products, patient, and physician support programs. India Business transferred from Biocon Limited to Biocon Biologics India Limited in FY20 India’s largest Insulins & leading Oncology.
  • Company Presence across therapies: Metabolics, Oncotherapeutics, Immunotherapy, Nephrology, and Comprehensive Care Division. Several brands ranked amongst ‘Top 3’ brands in respective segments.
  • Insugen ranks among Top 3 human insulin brands in India CANMAb is No. 1 brand of Trastuzumab in India Basalog, is No 2 brand of Insulin Glargine in India.
  • Biocon biosimilar Trastuzumab having regulatory approvals in 60 countries
  • India – Retained No.1 brand position of biosimilar Trastuzumab
  • US – 1st Indian company to have biosimilar approved
  • UAE – Captured 30% of MS by volume in its 1st year of launch

 

Company’s Product Portfolio and Approvals Augurs Well for Future 

  • The company received an establishment inspection report (EIR) for its insulin manufacturing facility in Malaysia, which had gone under inspection on 10th and 20th February. This should enable the company to cater to the US market by introducing Insulin Glargine with its partner Mylan.
  • Besides this, Biocon Ltd also received EIR and VIA classification for its two Bangalore based API manufacturing facility and also received Zero observation for Oral Solid Dosage facility.
  • Biocon Ltd also commercialized Pegfilgrastim, Fulphila in Australia, and Canada in Q4FY20. Despite the poor performance in the Branded formulation segment, CANMAb sales commenced in Sri Lanka in Q4FY20. 
  • Management expects the Biologics business to start showing recovery and normalization from Q2FY21 onwards.
  • Growth in Generic Formulations was led by healthy global demand in Formulations as well as API. Within the Generics segment, Formulations/API contributed in a 20:80 ratio. 
  • Biocon Ltd is building a portfolio of 28 biosimilars across high-value therapeutic areas & creating novel biologics via global partnerships

-Mylan & Sandoz

-Just-Evotec Biologics

-Bicara (Novel FmAb2)

-Novel Biologics-Insulin Tregopil &Itolizumab(Equillium)

Immuneel (CAR-T therapy)

Summary of developments status EQ001 (Itolizumab)

  • To fund the clinical trials, Equillium raised US$65 mn in its maiden public offering and listed on Nasdaq on October 12th, 2018. Biocon Ltd holds a ~13.1% stake in Equillium, among other rights as part of the out-licensing agreement. 
  • Biocon Ltd has a strong pipeline of biosimilars to be launched over the next 3-5 years across various markets. Given its record, the biosimilar products have good potential to garner market share despite the competition. 
  • New product launch and smooth operation ahead amidst US FDA approval for most of the facility should support longer-term earning growth prospectus. Also, the Branded formulation and Biologics segment (impacted by COVID-19) will recover gradually.

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Shuchi Nahar
Shuchi is NISM Certified Equity Research Analyst, CFA - Level 1, a student of Law and Finance, and an aspiring CS.
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