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Biocon Q4 results: Good progress on biosimilars, though margins below expectations

While Biocon's Q4 results show margins below expectations, the market is more focused on the company's progress on the biosimilar front.

twitter-logoE Kumar Sharma | April 27, 2018 | Updated 00:13 IST
Biocon Q4 results: Good progress on biosimilars, though margins below expectations

Biocon's financial results for the March quarter and the recently-concluded financial year are largely in line with the analyst and market expectations, though margins were found to be below expectations. But then, from the market's perspective, it does not seem as if the numbers are really into focus. What the market seems to be keen on is the progress card of the company on the biosimilars front. Or shall we say, its emerging biosimilars story, and there, the company seems to be making good progress. It has already got approvals from US regulators and expecting more approvals from US and European regulators in the next couple of quarters. In fact, the spokesperson for the company says "with all the positive regulatory developments in our biosimilars business we look forward to a positive overall performance in FY19."

In the media release put out by the company, its Chairperson & Managing Director, Kiran Mazumdar-Shaw commented on the progress made on the biosimilar front. "We concluded the year with a strong revenue growth of 27 per cent in Q4FY18, led by biologics and research services businesses, which grew 47 per cent and 45 per cent respectively. Our traditional small molecules and branded formulations businesses also turned in a positive performance this quarter. We crossed a key milestone in Q4 when our Insulin Glargine, received regulatory approvals in the developed markets of Europe and Australia. Our biosimilar Trastuzumab also got approval in Turkey," she said.

On the financials, she said, "The muted FY18 performance was on account of continued pricing challenges in the generics business coupled with a planned plant shut down for requalification and lower licensing income in the biologics business. In addition, operational expenses related to our Malaysia facility impacted the bottom line. However, a positive Q4 is indicative of a normalized business trend. Recent approvals of our biosimilars along with the strong performance of Syngene are expected to positively impact overall performance in FY19."

In terms of the financial performance for the year, Biocon's total revenue for FY18 stood at Rs 4,336 crore with revenue from operations at Rs 4,130 Crore. The EBITDA stood at Rs 1,035 crore, with an EBITDA margin of 24 per cent for FY18. Core EBITDA margin for FY18 (net sum of licensing, impact of forex and R&D) stood at 27 per cent. Reported net profit for the year was Rs 372 crore, which represents a net profit margin of 9 per cent.

Here were some of the key pointers shared by the company on the biosimilars :

1. Semglee, Insulin Glargine co-developed by Biocon and Mylan, is the first biosimilar from the partnered portfolio to be approved in the developed markets of EU and Australia.
2. Biocon also received Insulin Glargine approval in South Korea and biosimilar Trastuzumab approval in Turkey.
3. Biocon and Mylan agreed to accelerate the introduction of biosimilar Adalimumab in Europe through Mylan's in-licensing arrangement with Fujifilm Kyowa Kirin Biologics, to enable launch in EU, around market formation.
4. Biocon and Mylan have agreed to expand their long-standing collaboration to add two new next-generation biosimilar programs with Insulin Glargine 300 units/mL and Pertuzumab.

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