Despite the operational challenges posed by Covid-19, Biocon’s biologics division says it is committed to achieve its $1 billion revenue target by the end of FY22.
Biocon’s biosimilar subsidiary Biocon Biologics is focussing on normalising operations and is banking on its newly launched insulin glargine Semglee to gain traction in the US and other markets. A glargine is a lab-made version of long acting human insulin.
The Biologics division, which contributes 38 percent of Biocon's total revenue, saw sales declining 2 percent sequentially in the second quarter. The decline was despite the high-profile launch of Semglee in the US and other markets.
In the second quarter, revenue from the biologics division stood at Rs 676 crore. Biocon posted sales of Rs 1,760 crore in the second quarter, registering year-on-year growth of 10 percent. Net profit declined 10 percent to Rs 174 crore.
In Q1FY21, revenue from the biologics division rose 60 percent sequentially to Rs 692 crore, helping the company absorb the Covid shock to other business segments such as research services division Syngene and generics.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
“We have not been able to fully capitalise on the opportunity on account of some operational challenges, which have been amplified by Covid-19. This has resulted in some supply constraints, thereby impacting our top line,” said Christiane Hamacher, CEO & MD of Biocon Biologics, during the company’s recent earnings call.
Slow start for Semglee
Biocon’s partner Mylan launched Semglee in the US in August in both vial and pen forms at a 65 percent discounted list price, making it the cheapest available long-acting insulin glargine in the US.
In Europe, Semglee was launched in Q2 in Spain, which is the third largest market in Europe by value. It had earlier launched the drug in Germany and France.
The contribution of Semglee has been miniscule in the second quarter.
“We are confident that Semglee will have a long revenue stream, addressing a business opportunity of $2.1 billion with limited competition,” Hamacher said. She expects the product to gain market penetration in the next two quarters, especially in the US, which has a high need for low-cost insulin and insulin analogs.
Semglee is the third biosimilar launched by Mylan-Biocon in the US market. The combine launched two biosimilars, Trastuzumab and Pegfilgrastim, but the traction in terms of market share gains has been slow due to competition from rival biosimilars and branded versions still maintaining their hold through aggressive rebates.
Mylan-Biocon’s market share of Trastuzumab, which is used to treat certain types of breast cancers, was 6 percent. The other biosimilar, Pegfilgrastim, used to boost certain white blood cells destroyed due to chemotherapy, had a 15 percent share in the prefilled syringe market in Q2FY21.
In addition, in the second quarter, the company also faced challenges in expanding sales on account of cancer treatments taking a backseat during Covid-19.
“We are working to mitigate this and get back to maximum operations in the coming quarters. Moreover, on the back of Covid-19, there have also been some challenges in the already-stressed health care systems, impacting regular patient flow, particularly in critical-care segments such as oncology,” Hamacher added.
She added that despite operational challenges posed by Covid-19, the biologics division is still committed to achieve its $1 billion revenue target by the end of FY22.
Biocon said it is investing heavily on capacity expansion by setting up a large monoclonal antibody facility, which will go commercial in FY23. The company is also planning to build a second plant, which is expected to go commercial in FY24.