Biocon Group’s generics business continues to face pricing and demand challenges as was reflected in the July-September quarter also. Peter Bains, Group CEO, tells FE in an interview that the company’s long-term debt restructuring through a combination of $800 million dollar-denominated bonds and a $300 million new syndicated loan facility, with better terms will provide better financial liquidity to Biocon Biologics. Excerpts:
How will you describe Biocon’s consolidated financial performance during the July-September quarter?
At the group level, revenue from operations was Rs 3,590 crore, up 8% YoY on an adjusted like-for-like basis, after excluding revenues from the divested branded formulations India business. Strong double-digit growth in Biosimilars more than offset a relatively muted performance in the generics business and a marginal decline in Syngene’s revenues. Profitability at the group level remained healthy with core Ebitda and Ebitda margins of 28% and 20% respectively.
What led to the muted performance in the generics business?
Generics revenue was Rs 624 crore, a decline of 8% YoY, reflecting continued pricing pressure and demand contraction in the base business and a planned shut-down of one of our API facilities. We are expecting a recovery before the end of this financial year.
What were the drivers for the strong growth in the Biosimilars business?
The performance here was driven by strong market share gains in our US oncology and insulins franchises, expansion in Europe, and expansion in the depth and breadth of our patient reach in emerging markets. The key highlight was significant market share improvements in our oncology products in the US. Pegfilgrastim and Trastuzumab are now commanding around 20% shares and our insulin share is also strong in the mid to high teens, in the US.
Are you looking to further reduce debt? What is your strategy?
Debt reduction is a priority for Biocon Group and Biocon Biologics. Last fiscal, we reduced $250 million in acquisition debt. Recently, we issued an $800 million US dollar-denominated bond to restructure debt, extending maturities to 2030 for more financial flexibility. We also raised a new syndicated loan facility of $300 million on better terms. We will continue to explore options to further reduce debt in the near term.
What are your plans for capex spending in the coming years?
We are currently at peak capex, with ongoing expansion projects like doubling insulin capacity in Malaysia by Biocon Biologics. In generics, we have invested significantly to expand capacity in the mid-to-long term, especially in GLP peptides. Once these new capacities are up, we will see capex taper down in the coming years.
How confident are you of Biocon’s transition to accelerating growth in the second half of the fiscal?
We are confident of transitioning to accelerating growth in the second half of the year as business and operational trends in each of Biocon Group’s three business verticals are pointing in the right direction. Biocon Generics, which has been strategically investing in GLP-related API and formulation capabilities and capacities over the past five years, is now poised to launch generic Liraglutide, which comes off patent in November in the UK. Meawnhile, Syngene has returned to sequential growth and has good visibility of a pickup in momentum in the coming quarters led by its discovery services and biomanufacturing CMO business.
From: financialexpress
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