Biocon posts robust Q3 numbers; focus shifts to new product rollouts, US biosimilar market
E Kumar Sharma January 25, 2019
Biocon has reported a revenue growth of 43 per cent at Rs 1,566 crore in its third quarter results for financial year 2018-19 announced on Thursday. This, according to a note issued by the company, was led by "robust growth across all business segments: Biologics, small molecules, branded formulations and research services."
The company recorded a growth of 136 per cent in its net profit at Rs 217 crore in Q3, and the net profit, adjusted for exceptional item, stood at Rs 211 crore, reflecting a growth of 130 per cent.
It is perhaps with good reason that Kiran Mazumdar-Shaw, the chairperson & managing director of the company, is quoted as saying: "We have delivered the highest ever revenue and profit growth in absolute terms in Q3FY19, driven by strong business performance. Our Biologics segment more than doubled in revenue and recorded an EBIT margin of 30 per cent driven by increased penetration of our Pegfilgrastim in the US. Small molecules, branded formulations and research services also registered a robust growth this quarter.'' She also says: "Our biosimilars strategy is beginning to pay off with the launch of our biosimilars in the US and EU and we are greatly encouraged by the recent regulatory approvals of our key biosimilars in advanced markets like EU, Australia and Canada.''
Analysts read these as good set of numbers and in line with the fact that Mylan-Biocon have launched products in US and Europe. A leading analyst in fact also reminds us that this momentum should only increase as they launch more products from their pipeline in these markets. However, what is critical now is to watch how the biosimilar market itself evolves in the US because linked to that will be how the other products in the pipeline gain marketshare. For instance, the next product -biosimilar for the cancer drug herceptin, will be watched closely. How much market share all the products are able to garner and the extent to which gains can be replicated across products as they get launched in the lucrative markets of US and Europe would increasingly interest the investors and market now. This may be important because unlike in generics, the market dynamics is very different for each product and in some ways eventually determine the earnings to the stock.
While this may well be the start of their (Mylan-Biocon) pipeline delivery in the US, the market that they are targeting like the US is also evolving and the drug regulator is talking of changes in the norms to facilitate greater interchangeability between drugs, which of course means a greater ability for the biosimilars to compete. For much of the marketshare in biosimilars is linked to how the clinicians adopt the drugs.