Hold Biocon; target of Rs 290: ICICI Direct

ICICI Direct's research report on Biocon

Biocon mainly operates in biologics (biosimilars), small molecules (generics), branded formulations and contract research (Syngene). Biocon Biologics (BBL), a subsidiary of Biocon, entered into an arrangement to acquire Viatris’ biosimilars assets for US$3.34 billion. Biocon Biologics entered into a strategic alliance with SILS for access to 100 million vaccine doses per annum for 15 years. Biosimilar US pipeline: (approvals - Pegfilgrastim, Trastuzumab, Glargine, Adalimumab); filed - Aspart and Bevacizumab • In generics, it is among the world’s largest manufacturers of immunosuppressant and statin APIs.

Outlook

We maintain HOLD rating due to 1) growing margins sensitivity, 2) Viatris deal and subsequent execution risks and 3) impending price erosion risks, regulatory issues and increasing competitive landscape. We value Biocon at Rs 290 on an SOTP basis.