Biocon profit drops 44% in Q1FY22 due to subdued generics business, exceptional item

The earnings before interest, tax, depreciation, and amortisation (EBITDA) margins stood at 24 percent for Q1FY22 compared to the previous year's 25 percent.

The gross spend on research and development declined by 4 percent to Rs 136 crore on YoY basis.

The research services arm Syngene saw 41 percent YoY growth in Q1FY22.

Biologics

The core biologics segment reported revenue growth of 10 percent YoY at Rs 758 crore in Q1FY22, led by strong growth especially in India and other markets, especially biosimilars associated with Covid- care such as Itolizumab and Bevacizumab.

The company said it had expanded its footprint in emerging markets with the launch of biosimilars Trastuzumab, Insulin Glargine and Human Insulin in additional markets.

"Our Trastuzumab recorded a strong uptake in key emerging markets like Brazil, where it retained its leadership position with a 39 percent market share in the retail segment," the company said.

Biocon said it saw a steady increase in market share for Trastuzumab (Ogivri), Pegfilgrastim (Fulphila) and Glargine (Semglee) in the U.S. despite increased competition. Biocon's US partner Viatris markets these products in the US. Sales in Europe improved on the back of new market entries and steady market share in key countries.

Biocon said it had received marketing approval from TGA, Australia and MHRA, UK for biosimilar Bevacizumab during the quarter.

The company said on insulin Aspart, there are currently no pending technical or clinical queries on the BLA submitted to the USFDA.

"A pre-approval inspection of our biosimilar Aspart manufacturing facility in Malaysia is scheduled in Q3 of calendar year 2021," the company said. It also added that the regulatory process for the grant of ‘interchangeability’ designation to our biosimilar Glargine is progressing under the 351(k) pathway in the US with the goal date of end July 2021.

Generics

The generic segment where Biocon supplies active pharmaceutical ingredients (APIs) and formulations related to statins and immune-suppressants was down 22% YoY to Rs 486 crore.

The company attributed this decline to operational and supply chain challenges on account of COVID-19 second wave and pricing pressure in the US. The company also didn't have the benefit of last year where customers were stockpiling APIs on account of Covid-related uncertainties.

The company said it has launched two new formulations in the US during the quarter - Labetalol Hydrochloride tablets and Esomeprazole Magnesium Delayed-Release capsules.

"Increasing operational efficiencies through digitisation, cost optimisation and capacity enhancement, continue to remain a key focus area for us, as we bring high quality, affordable products to market," said Siddharth Mittal, CEO & Managing Director, of Biocon.

The company said its statin portfolio in the US, comprising Atorvastatin, Simvastatin and Rosuvastatin, held on to its market share for the quarter, even as it continued to see increasing pricing pressure.

Immunosuppressant Tacrolimus capsules, launched in the US in Q3FY20, has started to see a gradual ramp up in market share during the quarter.
"Consolidated revenues, at Rs 1,808 Crore, saw a muted growth on account of COVID-related operational challenges at Biocon’s API facilities, both in Bengaluru and Hyderabad," said Chairperson & Managing Director Kiran Mazumdar-Shaw.

"Business sentiments are favorable for Biosimilars, Generics and Research Services. Globally, we see a strong demand for biosimilars and generic drugs, given the growing emphasis on affordable drug pricing. The outlook for the rest of the year is promising with several drug approvals on the anvil, contingent to timely USFDA onsite inspections in India and Malaysia, whilst Research Services continue to see rising demand,” Mazumdar-Shaw added.

Biocon announced that John Shaw, non-independent director on the Board, and husband of Mazumdar-Shaw will retire due to health reasons on July 23. Shaw was on the Board since 1999.

"Over the past 22 years, John Shaw has played an important role in building Biocon, ensuring the highest levels of corporate governance in the Company, as well as, contributing to the financial and strategic development of the Group. On behalf of the Board, we express our deep appreciation and gratitude to John Shaw, for his stewardship and guidance," Biocon said.

John Shaw earlier this week stepped down from Syngene.