Clinigene & Syngene may list in a year's time: Biocon

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Pharma major Biocon 's plans to list its contract research arm Syngene and clinical trial division, Clinigene has been put on the backburner for a year now.

In an interview to CNBC-TV18, Kiran Mazumdar Shaw, Chairman and Managing Director of the company said, "We will wait for one year for the Clinigene and Syngene listing."

She reasoned that the company is revamping its business model of the units. Shaw divulged that their research service business is likely to be in good shape in the next 12-18 months.

The company is expecting Pfizer revenues in next 24 to 36 months, she informed.

Below is a verbatim transcript of Kiran Mazumdar Shaw's interview with CNBC-TV18's Mitali Mukherjee and Udayan Mukherjee. Also watch the accompanying video.

Q: What is the update on Clinigene? When you scheduled or penciled a listing?

A: The Syngene and Clinigene IPO is something which we have deferred. The reason why we have deferred this particular listing is because the whole research services space is undergoing a lot of change.

The conventional, component research services model is giving way to more integrated services, where companies are not just looking at the cost arbitrage. They are looking at preferred partnerships, for strategic development partners and therefore we believe that both Syngene and Clinigene need to address this in a very pragmatic manner and that is what we are doing.  

We are actually transforming the business model at Syngene and Clinigene, so that we can be looked upon as a strategic development partner for these companies who are looking at external research.

Q: How long do you think it will take this process of transformation or rediscovering the models for these companies? This was an event which a lot of investors regarded as a bit of a value unlocking event for Biocon, so by which time you can go to the market?

A: We will look at it for at least another 12 months before we really address the IPO route. As you know, it is important to not just have a blip in terms of unlocking value. It is very important to sustain shareholder value. I think by doing it prematurely, we would have run the risk of not being able to do that.

These businesses are looking very good now because we have started engaging in various partnerships and collaborative models. It is very similar to what we have done with BMS. BMS itself has turned out to be a very unique model for us. If we look at how we want to position these companies in the future it is about scaling up and developing a very strong strategic partnership. So, 12 months is a minimum, I would say, to get this business in reasonable shape.

Q: Could you then give us some concrete idea of the kind of time lines you have for booking the Pfizer licensing income because that will actually provide a lot of jam to your income in the next few quarters?

A: The Pfizer partnership is something that we will be unlocking. Over a period of 12-18 months we will be unlocking the value that we have got from these upfront payments. However, we also have milestones, so, I would say that over the next 24-36 months we will be able to capture all the realizations from the Pfizer payment.

Q: The market was expecting to see about a USD 150 million in terms of regulatory milestone as you indicated and that was to come in Q3 itself. Is that on as scheduled?

A: That is incorrect, because regulatory milestones are not going to happen in one shot. There are some amounts of milestones coming in from regulatory approvals in emerging markets but most of the big ticket milestones are going to come from US, European, Japanese and other kind of regulatory approvals. That is hopefully going to start sometime; late 2012 onwards. We are expecting to see our recombinant human insulin in the US and European markets by 2013.

Q: The first half of the year has been quite strong for you just in terms of standalone performance and even margin improvement. What would you guide for, then, in terms of a full year performance that Biocon can put through or put out?

A: I certainly think we can continue with this trend. I look forward to ending this year also on a robust note. I am very optimistic about the year ahead because we are clearly seeing that there are some strong growth opportunities for us to peruse. One of them is the Pfizer deal where we expect to, at least, start seeing good market share beginning in the emerging markets. As we move forward, the regulated markets will open up.

We are also beginning to look at our traditional Active Pharmaceutical Ingredients (APIs) business and we want to really move away from just being suppliers or APIs to shaping demand through Abbreviated New Drug Application (ANDA) dossier. We will move into ANDA dossier arena with our generics and generic APIs which is the plan going ahead.

We are also looking at our research services businesses which we think will be in good shape over the next 12-18 months, hopefully then, allowing us to take it public. We also have other businesses like our licensing opportunities which we think will augur well for us going forward.