Biocon shrs drop after Q1 net rises lower-than-expected 13%

Moneycontrol Bureau

Biocon shares slipped 2% on Thursday after the biotechnology company reported lower-than-expected first quarter earnings. Its quarterly net profit rose 13% to Rs 79 crore, while net sales rose 30% to Rs 571 crore. Analysts had expected Biocon to report a net profit of Rs 88 crore, on revenue of Rs 568 crore in April-June, according to a CNBC-TV18 poll. What was more worrying was EBITDA (earnings before interest, taxes, depreciation and amortization) margin at 23%, a 300 basis points lower than the street expectation of 26%. " EBIDTA margins were extremely disappointing. Company has booked only Rs 13.9 crore of licensing income and has seen significant y-o-y increase in other expenses," said Hitesh Mahida, an analyst at Fortune Equity Brokers. Biocon Chairman and MD Kiran Mazumdar-Shaw said that on the licensing front, company is in discussions for several advancing research programmes and is hopeful many of them will be realised going forward. OTHER HIGHLIGHTS: - Biopharma business grew 23% year-on-year.
- Branded formulations saw 52% growth, led by oncology, diabetology and comprehensive care
- Research services (Syngene and Clinigene) grew 40%.
- Global phase I trial of biosimilar insulin Glargine was completed successfully.
- Phase III trials of psoriasis drug Itolizumab showed promising results, confirming achievement of primary endpoint and multiple secondary end points.
- The Abbott Nutrition R&D Centre was inaugurated in Biocon Park.
- Total Q1 expenses up 32% to Rs 497 crore. Other expenses rose 64% to Rs 120 crore. Biocon shares were down 2.2% at Rs 246.60 on NSE in morning trade. Kiran Mazumdar-Shaw, chairman and managing director of Biocon says, "R&D is an integral part of our business strategy in terms of unlocking and creating value. The reason why R&D has gone up is because our programs are advancing into clinic. Clinical development costs impact R&D spends hugely."
Nachiket Kelkar
nachiket.kelkar@network18online.com