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Biocon Biologics buys Viatris’ biosimilars assets for up to $3 bn

Biocon Biologics buys Viatris’ biosimilars assets for up to $3 bn

The deal is expected to expand Biocon's EBITDA base and strengthen overall financials.

Biocon Biologics buys Viatris’ biosimilars assets for up to $3 bn Biocon Biologics buys Viatris’ biosimilars assets for up to $3 bn

Biocon Biologics Ltd. (BBL) will acquire biosimilars business of Viatris Inc. to create a fully integrated global biosimilars enterprise, the biopharmaceutical major said on Monday.

The company announced that it has entered into a definitive agreement with Viatris where the latter will receive consideration of up to $3.335 billion, including cash up to $2.335 billion and Compulsorily Convertible Preference Shares (CCPS) in BBL, valued at $1 billion. The Board of Directors of both companies have approved the transaction, as per a statement from Biocon.

BBL will have a comprehensive portfolio comprising its current range of commercialised insulins, oncology and immunology biosimilars as well as several other biosimilar assets currently under development. BBL also has access to the vaccines portfolio through its previously announced partnership with Serum Institute Life Sciences (SILS).

“This strategic combination brings together the complementary capabilities and strengths of both partners and prepares us for the next decade of value creation for all our stakeholders,” Kiran Mazumdar-Shaw, executive chairperson, Biocon Biologics, said.

“The deal will enable BBL to attain a robust commercial engine in the developed markets of U.S. and Europe and will fast-track our journey of building a strong global brand. It will also make us future-ready for the next wave of products,” she added.

As far as the financial rational of the agreement is concerned, Biocon said that post-closure of the deal, BBL will realise the full revenue and associated profits from its partnered products; a step-up from its existing arrangement with Viatris.  

The deal is expected to expand BBL’s EBITDA base and strengthen overall financials, enabling investments for sustained long- term growth, Biocon said in a statement, adding that the deal will lead to operational efficiencies across the complete value chain and build agile capabilities in development, manufacturing, regulatory, supply chain and commercialization in developed and emerging markets.  

“Combining Viatris’ biosimilars business with BBL accelerates the build out of our commercial capability in developed markets in order to become a strong global brand with a direct presence in U.S., Europe, Canada, Japan, Australia and New Zealand,” the company said.

BBL currently has a portfolio of 20 biosimilars. The acquisition of biosimilars assets of  Viatris significantly strengthens BBL’s position in providing affordable access to patients through its portfolio in diabetes, oncology, immunology and other non-communicable diseases. It also prepares BBL for greater success with the commercialisation of its future pipeline.

“By integrating Viatris’ portfolio, BBL will have one of the broadest and deepest commercialised biosimilars portfolio in the industry-- comprehensive biosimilar insulins portfolio, including rh-Insulin, bGlargine and bAspart, a growing biosimilar oncology portfolio, including bTrastuzumab, bBevacizumab, bPegfilgrastim and a significant presence in autoimmune segment through in-licensed products like bAdalimumab, bEtanercept,” the company said.

Viatris will receive cash consideration of $2 billion on closing of the transaction and up to $335 million as additional payments expected to be paid in 2024. Additionally, upon closing of the transaction, BBL will issue $1 billion of Compulsorily Convertible Preference Shares (CCPS) to Viatris, equivalent to an equity stake of at least 12.9 per cent in the company, on a fully diluted basis.  

The transaction is expected to close in the second half of 2022, subject to satisfaction of closing conditions (including certain regulatory approvals). The companies will also enter into a Transition Services Agreement, pursuant to which Viatris will provide certain transition services, including commercialisation services, for an expected two-year period. Viatris also will pay $50 million to BBL to fund certain capital expenditures, according to the company.

BBL will also acquire Viatris’ global commercial infrastructure in developed and emerging markets and Viatris’ global biosimilars business with an estimated revenue of $875 million and EBITDA of $200 million for CY 2022 and estimated to exceed $1 billion in revenue next year. Biocon will also acquire Viatris’ rights in all biosimilars assets including its in-licensed portfolio and an option to acquire Viatris’ rights in bAflibercept and transition services for an expected two-year period to ensure a seamless transition with partners and continued services to patients and customers  

The cash payment of $2 billion will be funded by ~$800 million, raised through equity infusion in BBL and the remainder to be funded by debt, additional equity or a combination thereof. BBL has received expressions of interest from financial institutions for debt financing and equity commitments from existing shareholders.

Kiran Mazumdar-Shaw will continue as the Executive Chairperson of BBL. Viatris will designate Rajiv Malik, president of Viatris, to serve on the BBL board.

 

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