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True North's investment creates floor valuation for Biocon Biologics

True North will invest Rs 536.25 crore for a 2.44 per cent minority stake in Biocon Biologics India, taking its value to Rs 21,450 crore, or around $3 billion

twitter-logoE Kumar Sharma | January 10, 2020 | Updated 00:18 IST
True North's investment creates floor valuation for Biocon Biologics

Indian biopharmaceuticals major Biocon recently announced that private equity firm True North will invest in its biosimilar business. Analysts believe this to be the first important step in the company's biosimilar development journey, especially from the perspective of raising resources.

True North will invest Rs 536.25 crore for a 2.44 per cent minority stake in Biocon Biologics India, taking its value to Rs 21,450 crore, or around $3 billion. This investment is crucial development for Biocon's biosimilar subsidiary, given the high costs involved in developing biosimilars.

Analysts feel this needs to be seen in the light of the company's growth aspirations and its future resource raising plans. What however they find significant is that this deal creates a floor valuation for this Biocon arm or in a sense as the business improves any further moves to raise equity will happen at a higher valuation.

"We are extremely pleased to welcome back True North as a shareholder in our group. True North has been a committed investor in both Biocon and Syngene prior to listing. This investment is an endorsement of the value that Biocon Biologics has demonstrated as a global biosimilars player, having commercialized three of its molecules in developed markets like the EU, the US, Japan and Australia," said Biocon Founder and Chairperson Kiran Mazumdar-Shaw.

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She called it "an important inflection point as we gain commercial success with our first wave of biosimilar products and invest in the long term through broadening our pipeline, expanding our manufacturing capacity and increasing our commercial footprint. We have thus started the value unlocking process with the aim of investing, competing and winning in the large and growing opportunity for biosimilars."

Biocon Biologics claims to have one of the largest biosimilars portfolios, a wide global footprint, state-of-the-art manufacturing facilities, world-class R&D ecosystem, and high quality and compliance standards. It has a product pipeline of 28 molecules, including 11 with Mylan, several with Sandoz, and is developing many independently. The company's therapeutic basket includes molecules for diabetes, oncology, immunology, dermatology, ophthalmology, neurology, rheumatology and inflammatory diseases. So far, the company has commercialised five biosimilars: Trastuzumab, Pegfilgrastim, Bevacizumab, rh-Insulin and Insulin Glargine, in several markets worldwide. The company has commercialised three biosimilars in developed markets like the EU, Australia, the US and Japan.

ALSO READ:Biosimilars in 2020: All eyes on how Indian pharmas cash in on investments after betting on foreign markets

Dr. Christiane Hamacher, CEO, Biocon Biologics said, "Through prudent investments in R&D, high quality manufacturing infrastructure as well as commercial and market access infrastructure, we are confident of achieving our aspirational goal of serving 5 million patients through our biosimilars portfolio and reaching our aspirational revenue target of $1 billion in FY22."

In another development, Biocon Biologics has appointed MB Chinappa as its Chief Financial Officer (CFO). He comes from Biocon's subsidiary company Syngene International, where he was President (Finance) and CFO since 2008.

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