Biocon to absorb biologics unit, eyes Rs 4,500 cr fund raise to buy Viatris’s residual stake

Biocon

Biocon on Saturday announced that it will fully integrate its biosimilars arm Biocon Biologics Limited (BBL) into the parent company. The company said the move is aimed at creating a unified biopharma powerhouse.

According to the company, the restructuring is expected to close by March 2026, will simplify the corporate structure and sharpen Biocon’s focus on diabetes, oncology and immunology — therapeutic areas that make up nearly 40 percent of global pharma revenues. The combined entity will offer a unique portfolio spanning biosimilars, insulins, GLP-1 peptides and complex generics, positioning Biocon among the few global players with scale in both generics and biologics.

The deal values Biocon Biologics at about $5.5 billion. Biocon will buy out minority investors including Serum Institute Life Sciences, Tata Capital Growth Fund II and Activ Pine LLP through a share swap of 70.28 Biocon shares for every 100 Biocon Biologics shares. It will also acquire Viatris Inc.’s residual stake for $815 million, split between $400 million in cash and $415 million in stock.

To fund the cash component, Biocon plans to raise up to Rs.4,500 crore ($500 million) via a qualified institutional placement and take bridge loans. Swap ratios were vetted by EY, while Morgan Stanley advised on the transaction.

Before the integration, Biocon promoters held about 54.45% in Biocon. After the transaction and the planned fundraise, their stake is expected to drop to around 44.4%, falling below the 50% threshold. This reduction reflects the share swap with Biocon Biologics’ minority shareholders and the issuance of new equity for the QIP.

“Bringing these two businesses together and having a combined balance sheet, combined financial metrics which are very strong… this is a very important decision,” Biocon Executive Chairperson Kiran Mazumdar-Shaw said in a post-announcement media call.

Why now?

“When we created Biocon Biologics as a separate entity, the objective was clearly to attract investments and build global scale in biosimilars. We did that successfully, even acquiring Viatris’ biosimilars business for $3 billion. But markets kept devaluing both Biocon and Biocon Biologics because of debt overhang and holding company discount. Folding Biologics back into Biocon unlocks true value and gives us a much stronger balance sheet,” Mazumdar-Shaw said.

The debt-to-EBITDA ratio has already improved from 4.3x in 2020 to 2.5x today, and Mazumdar-Shaw expects further deleveraging, enabling free cash flow for aggressive product launches.

Leadership reset

The combined entity will be helmed by Shreehas Tambe, currently CEO of Biocon Biologics, while Siddharth Mittal moves into a group leadership role. Mazumdar-Shaw remains Executive Chairperson.

“We are very well placed and confident that we will continue to build on the leadership we already have,” she said.

Biocon is betting big on the “diabesity” market, leveraging its interchangeable biosimilar insulins and a GLP-1 portfolio set to open up by end-2026.

“One year down the line, this will be a huge unique proposition for Biocon,” Mazumdar-Shaw noted, adding that oncology and immunology synergies will further boost performance.

Biocon Biologics ranks among the world’s top five biosimilar players by revenue, with 10 commercialized products across major markets. Biocon’s generics arm offers more than 90 products globally. Together, the businesses serve patients in over 120 countries and are betting big on the fast-growing “diabesity” market with biosimilar insulins and GLP-1 peptides.

“Biocon is one of the few companies globally with a truly integrated end-to-end biosimilars model. This consolidation strengthens that advantage,” Mazumdar-Shaw emphasized.