Indian pharma must ensure compliance with global standards: Kiran Mazumdar-Shaw

Shaw said developing the highest quality drugs without any adverse impact on patients has to be a priority for the Indian pharmaceutical industry.

Biocon’s profit rose 31 percent to Rs 313 crore in the March quarter. Kiran Mazumdar-Shaw, the executive chairperson of the biopharmaceutical company that makes drugs to treat diabetes, cancer, and autoimmune diseases, told Moneycontrol in an interview that Biocon was evaluating expansion in key European countries as it transitions the Viatris business.

Biocon Biologics (BBL), a unit of Biocon, acquired Viatris’ biosimilars business last year. Biosimilars are drugs that are similar in structure and function to biologic medicines, which are made in living systems such as yeast, bacteria, or animal cells.

With the Indian government tweaking the policy on export of cough syrups, after reports that syrups made by three Indian companies were linked to the deaths of children, Shaw said developing the highest quality drugs without any adverse impact on patients has to be a priority for the Indian pharmaceutical industry. Edited excerpts:

Biocon’s biosimilars business posted 4Q revenue of over Rs 2,000 crore. With new launches in FY24, how much revenue uptick do you expect?

Biocon Biologics ended FY23 with quarterly revenues of over Rs 2,000 crore, which translates to a $1 billion annual revenue trajectory. This consolidation of the acquired biosimilars business of Viatris, coupled with strong growth in our underlying business, led to our revenues more than doubling on a year-on-year basis to Rs 2,102 crore in Q4.

The acquisition of Viatris’ biosimilar business has enabled us to create a unique, fully integrated biosimilars enterprise with clear growth catalysts for FY24 and beyond.

We will build on the $1 billion annual revenue run rate through improved performance of our commercialised biosimilars in global markets as well as several upcoming launches such as Hulio (Adalimumab), a biosimilar to blockbuster arthritis drug, Humira.

We expect to improve our market share for biosimilar Insulin Glargine (Semglee) and biosimilar Pegfilgrastim (Fulphila) in the US. We are also evaluating expansion in key countries in Europe as we transition the Viatris business.

Which markets contributed to growth in Biocon Biologics in Q4?

The growth in the fourth quarter was driven by strong performance across advanced and emerging markets. This quarter had the full impact of the acquired biosimilars business.

Advanced markets contribute to 70 percent of our global biosimilars sales, while emerging markets contribute 30 percent.

The growth in our emerging markets business was driven by continued strong demand for Biocon Biologics biosimilar insulins and monoclonal antibodies, growing portfolio coverage and several new launches. We expanded our global reach through eight new product launches in the AFMET, LATAM and APAC regions. We also launched our biosimilar Insulin Aspart in Malaysia and biosimilar Adalimumab in two new countries.

Given the current global economic slowdown and concerns over US debt, do you expect a negative impact on demand for your products?

On the contrary, slowing global economic conditions are expected to trigger the greater utilisation of generic drugs and biosimilars as they offer lower-cost alternatives to expensive innovator molecules and branded biologic drugs.

High levels of government debt in the US could translate to policies favouring wider use of generic and biosimilar drugs because expanded biosimilars adoption is expected to generate more than $100 billion of savings in the US over the next five years.

In Europe, too, mounting financial pressure caused by high public debt, rising inflation and slow economic growth are expected to spur higher biosimilars use.

Through our biosimilars portfolio, which spans therapeutic areas of diabetes, cancer and autoimmune diseases, we are helping governments in many advanced-market countries rationalise their healthcare budgets.

You said BBL will integrate the acquired business of Viatris in phases. What are the integration plans for advanced and emerging markets?

The integration of the Viatris’ biosimilar business is progressing well. We will be transitioning the acquired business in a phased manner. Over 70 emerging markets will be transitioning to Biocon Biologics to begin with, followed by the US and the EU.

We remain on track to integrate a major part of the acquired biosimilars business during FY24. In the interim, Viatris continues to provide commercial and other transition services to Biocon Biologics.

Does BBL or Biocon plan to sell stake to raise funds to retire acquisition-related debt? Are you in talks for potential fundraising?

Biocon currently has a 70 percent stake in BBL. Whilst the present debt level can be comfortably serviced through BBL’s strong cash flows, we could further dilute this holding through a potential fundraising in FY24.

… with the restructuring of the SILS (Serum Institute Life Sciences) alliance, we are diluting only 5 percent equity and not 15 percent as planned earlier. This frees up 10 percent equity which we may divest this year to provide us flexibility for any business development opportunities.

How much do you expect to spend on R&D for biosimilars in FY24?

We continue to make investments in R&D to be able to bring more biosimilars into the market, in line with our commitment to making affordable healthcare accessible to all.

Net R&D investments for the year at Biocon Biologics increased 186 percent to Rs 889 crore, reflecting the good progress of three of our pipeline assets, bDenosumab, bUstekinumab and bPertuzumab, in global clinical trials.

We are on track to complete the studies for biosimilar Ustekinumab and Denosumab by the end of 2023 and 2024, respectively. Net R&D investments, at 16 percent of our revenues for the year, are expected to be ~12 percent as we accrue full revenues from the acquired business, which will lead to a substantial expansion in our top line.

What are the terms of BBL’s restructured agreement with Serum Institute Life Sciences?

Serum Institute Life Sciences has doubled its investment in BBL to $300 million as a part of the restructuring of its strategic alliance through the conversion of its $150 million loan provided to Biocon Pharma into equity in BBL. This is in addition to the $150 million that SILS invested in BBL in November 2022. Due to certain regulatory approval challenges, we could not go ahead with our earlier agreement, hence had to revise the terms of our alliance.

As per the new arrangement, BBL will have access to 100 million doses of vaccines annually, together with distribution rights to Serum’s vaccines globally, however, without any assured revenues and EBITDA.

What can we expect in terms of biosimilar launches in FY24?

There were more than 35 launches of BBL’s eight commercialised biosimilars in markets worldwide in FY23, which augurs well for our growth prospects in FY24. We are in a state of preparation for the launch of Hulio (Adalimumab), a biosimilar version of blockbuster arthritis drug Humira, in July.

We are looking to get US FDA approvals for our biosimilar Aspart and biosimilar Bevacizumab in FY24, which would open up the path to their commercialisation.

The government tweaked the export policy for cough syrups. How do you see this move? What should be the way forward?

While I would not like to comment on this specific product-related issue, I would like to reiterate that as the pharmacy of the world, India has a huge responsibility towards global health and the Indian pharmaceutical industry needs to ensure that there are absolutely no lapses in compliance to the global regulatory standards.

Developing the highest quality products and delivering to the patient without any adverse impact has to be a priority for the Indian pharmaceutical industry.

The government is doing a lot to ensure that quality compliance remains in focus at all times. With a highly experienced industry veteran as the new drug regulator, we should expect a more robust oversight on quality compliance.