Bengaluru, Karnataka, India, October 26, 2017
Biocon Ltd (BSE code: 532523, NSE: BIOCON), Asia’s premier biopharmaceuticals company, today announced its consolidated financial results for the fiscal second quarter ended on September 30th, 2017.
Commenting on the quarterly performance and highlights, Chairperson and Managing Director Kiran Mazumdar-Shaw stated: “Whilst we are pleased with the growth recovery of our research services (Syngene) and branded formulations business segments in the July – September quarter, our overall earnings performance was muted on account of several specific factors. In particular, plant modifications undertaken to comply with regulatory requirements led to production disruptions. Additionally, we experienced regulatory and tender delays in some emerging markets for our biosimilars business. Malaysia facility costs and pricing pressures in our APIs business continue to weigh on our P&L. We expect these headwinds to ease by the end of this fiscal.”
She added: “A significant development this quarter is the submission of our Insulin Glargine dossier with the USFDA under 505 (b)(2) pathway.”
FINANCIAL HIGHLIGHTS (CONSOLIDATED) : Q2FY18
As per IND-AS In Rs Crore, except growth numbers
| Particulars | Q2FY18 | Q2FY17 | Growth |
| INCOME | |||
| BIOCON | |||
| Small Molecules | 351 | 403 | -13 % |
| Biologics | 156 | 156 | 0 % |
| Branded Formulations | 176 | 137 | 29% |
| Research Services | 335 | 303 | 11% |
| Inter-segment | (49) | (44) | 10% |
| Revenue from Operations# | 969 | 955 | 2% |
| Other Income | 50 | 38 | 32% |
| TOTAL REVENUE | 1019 | 993 | 3% |
| EBITDA | 233 | 278 | -16% |
| Interest & Finance charges | 14 | 7 | 112% |
| Depreciation & Amortisation | 93 | 68 | 37% |
| PBT | 132 | 208 | -37 % |
| Net Profit | 69 | 147 | -53% |
| R&D Expenses in P&L | 54 | 65 | -17% |
| Gross R&D Spends | 93 | 113 | -17% |
| EBITDA Margin | 23% | 28% | |
| Core EBITDA Margin | 27% | 32% | |
| Net Profit Margin | 7% | 15% | |
| #includes Licensing Income | 1 | 33 |
EXECUTIVE COMMENTARY:
PERFORMANCE REVIEW: Q2FY18
Biocon’s Total Revenues for Q2FY18 stood at Rs 1019 Crore, up 3% YoY. Revenues from Operations grew 2% YoY to Rs 969 Crore, despite a drop in licensing income this quarter. The Licensing Income for the quarter stood at Rs 1 Cr as compared to Rs 33 Crore in the comparable period last year. Other Income in Q2FY18 stood at Rs 50 Crore. Net R&D Expenses at Rs 54 Crore corresponds to 9% of our revenue (ex-Syngene). Gross R&D Spends for Q2FY18 stood at Rs 93 Crore, which is line with our commitment to R&D.
We reported an EBITDA of Rs 233 Crore, with an EBITDA margin of 23% for Q2FY18. The operating margins were largely impacted due to inclusion of fixed and operating costs related to the Malaysia facility and reduced gross margins due to pricing pressure in key markets. Core EBITDA margins for Q2FY18 (Net of Licensing, Forex impact and R&D) stood at 27%. Interest and depreciation costs increased 43% to Rs 107 Crore for the quarter, attributable to our Malaysia facility. Reported Net Profit for the quarter was Rs 69 Crore, which represents a Net Profit margin of 7%.
Notes: Figures above are rounded off to the nearest Cr; % based on absolute nos.
BUSINESS SEGMENT REVIEW
SMALL MOLECULES: APIs & Generic Formulations
The Small Molecules business reported a revenue of Rs 351 Crore. The business was impacted by a lower offtake of certain products as a result of pricing pressure faced by some of our clients. However, we were able to increase market share for some of our specialty APIs in key markets. During the quarter, we made regulatory submissions for key APIs in both regulated and emerging markets.
Biocon’s Active Pharmaceutical Ingredients (API) manufacturing facility in Vishakhapatnam, Andhra Pradesh successfully completed a US FDA audit without any observations.
The Generic Formulations business made its debut in the US with the launch of Rosuvastatin Calcium tablets in Q2FY18. We also commissioned our first solid oral dosage forms manufacturing facility during the quarter. The commissioning of the facility and the completion of full cycle development for new products will enable us to ramp up our regulatory filings for Generic Formulations in developed and emerging markets.
BIOLOGICS : Novels & Biosimilars
Revenues from the Biologics vertical, comprising Novel Biologics and Biosimilars, were flat at Rs 156 Crore as plant modifications undertaken to comply with regulatory requirements led to production disruptions. Additionally, we continued to witness regulatory and tender delays in some emerging markets which impacted revenue growth.
Biosimilars: Insulins & Analogs
The Insulins business maintained its robust year-on-year growth momentum in Q2FY18 led by increased uptake in key emerging markets. Insulin sales in Malaysia and Mexico added to the revenues for this business in the quarter.
Regulatory Update
During the quarter, our partner Mylan has made a regulatory submission for our Insulin Glargine under the 505 (b) (2) pathway with the USFDA. Our dossier for this product is also under advanced stages of review in some of the other developed markets.
Our Insulin manufacturing sites in both India and Malaysia received GMP certifications from regulators representing key markets. The Malaysia facility received EU GMP Certification for Insulin Glargine Drug Substance and Drug Product.
Additionally, our Bangalore site received GMP Certification for Insulin Glargine Drug Substance and Drug Product from NPRA, Malaysia and MFDS, South Korea.
We have also made new regulatory submissions for Insulin Glargine in some of the emerging markets, during this quarter.
Biosimilars: Monoclonal Antibodies & Recombinant Proteins
The biosimilar dossiers submitted by Biocon and Mylan in several developed and emerging markets across the globe are currently under review.
Regulatory Update: US FDA
The US FDA has issued a Complete Response Letter (CRL) for biosimilar Pegfilgrastim jointly developed by Biocon and Mylan. The application for Pegfilgrastim will be resubmitted after it has been updated with data from ongoing facility requalification activities. The CRL did not raise any questions on biosimilarity, pharmacokinetic/ pharmacodynamic data, clinical data or immunogenicity. We do not expect this CRL to impact the commercial launch timing of biosimilar Pegfilgrastim in the US. We are committed to working with the agency to expeditiously resolve the issues stated in the CRL.
The FDA also extended the target action date for the biosimilar Trastuzumab application to Dec 3, 2017 to review some of the clarificatory information submitted to them as a part of the application review process. This three-month extension is not expected to impact the anticipated timeline for commercialization of this product in the US.
Regulatory Update- EMA
With respect to our EMA audits and Marketing Authorization Applications (MAAs) for proposed biosimilars of Trastuzumab and Pegfilgrastim, the EMA’s CHMP (Committee for Medicinal Products for Human Use) has considered and accepted our request for withdrawal of the MAAs as part of the process linked to the re-inspection of our Drug Product facility in Bangalore.
We have implemented the Corrective and Preventive Actions (CAPAs) in accordance with the plans submitted earlier during the year to EMA for our Drug Product facility and are engaged with the regulator on next steps for re-inspection of this facility and early resubmission of our dossiers.
Novel Biologics
We have progressed further with our novel fast acting, orally delivered Insulin Tregopil this quarter by collaborating with JDRF, the world’s leading organization supporting Type 1 diabetes research, which has extended its support to Biocon’s study of novel Insulin Tregopil to treat Type 1 diabetes. The primary objective of this study will be to evaluate the safety and tolerability of multiple ascending doses of Insulin Tregopil in individuals with Type 1 diabetes.
BRANDED FORMULATIONS
The Branded Formulations business, which includes sales in India and UAE, reported a revenue of Rs 176 Crore, a YoY growth of 29%.
Revenues for the Branded Formulations (India) business were driven by strong sales of key brands such as Insugen®, Basalog®, BIOMAb EGFR® and CANMAb™. Channel restocking post GST related disruption reflected a strong business traction across Metabolics, Oncology, Comprehensive Care and Institutional Business divisions.
BIOMAb EGFR® retained its No. 1 position* while CANMAb™, which ranks as the No. 2 brand* of Trastuzumab in the country, garnered a volume market share of over 30% this quarter. Our rh-Insulin brand Insugen® also reported a growth of over 20%* in Q2FY18. (*Source: IMS data)
Our efforts to facilitate early adoption of CytoSorb® saved the lives of seven critically ill H1N1 patients, this quarter.
During Q2, we also commenced a 40-patient, multi-center, pan-India study to identify potential biomarkers for treating subgroups of chronic plaque psoriasis patients with ALZUMAb™. Scientific presentations related to key products such as BIOMAb EGFR® (Nimotuzumab) and Basalog® (Insulin Glargine) made at key international forums will help build additional confidence in our products among the medical fraternity in India.
Our Branded Formulations business in UAE reported a strong revenue growth of 42% driven by our metabolics portfolio comprising novel products like Jalra®and Imprida® and contribution from the newly launched Glaricon™, our brand of biosimilar Insulin Glargine. A pickup in the sales momentum of our other branded generic products also boosted revenue during the quarter.
RESEARCH SERVICES – SYNGENE
Research Services through Syngene reported revenues of Rs 335 Crore registering a growth of 11%. The performance was led by sustained growth in the Dedicated R&D Centers and strong performance by Chemical Development vertical with some catch-up seen from the delayed projects in Q1.
Biocon: Ranked Among Top 10 Global Pharma & Biotech Employers for 2017
Biocon has featured as the only Asian Company in the prestigious US-based Science Magazine’s Annual ‘Science Careers Top 20 Employer’ list for 2017. Ranked at No. 9 amongst global pharma and biotech companies, Biocon is recognized for ‘being innovative’, ‘having a clear vision’ and ‘being socially responsible’. Biocon has been in this exclusive list of Global Top 20 Best Employers since 2012.
Enclosed: Fact Sheet – with Financials as per IND-AS
About Biocon Ltd:
Biocon Limited, publicly listed in 2004, (BSE code: 532523, NSE Id: BIOCON, ISIN Id: INE376G01013) is India’s largest and fully-integrated, innovation-led biopharmaceutical company. As an emerging global biopharmaceutical enterprise serving customers in over 120 countries, it is committed to reduce therapy costs of chronic diseases like autoimmune, diabetes, and cancer. Through innovative products and research services it is enabling access to affordable healthcare for patients, partners and healthcare systems across the globe. It has successfully developed and taken a range of Novel Biologics, Biosimilars, differentiated Small Molecules and affordable Recombinant Human Insulin and Analogs from ‘Lab to Market’. Some of its key brands are INSUGEN®(rh-insulin), BASALOG® (Glargine), BIOMAb-EGFR™ (Nimotuzumab), CANMAb™ (Trastuzumab), Evertor® (Everolimus) and ALZUMAb™ (Itolizumab), a ‘first in class’ anti-CD6 monoclonal antibody. It has a rich pipeline of Biosimilars and Novel Biologics at various stages of development including Insulin Tregopil, a high potential oral insulin. Visit: archive.biocon.com Follow us on Twitter @bioconlimited
Earnings Call
The company will conduct a call at 9.00 AM IST on October 27, 2017 where the senior management will discuss the company’s performance and answer questions from participants. To participate in this conference call, please dial the numbers provided below ten minutes ahead of the scheduled start time. The dial-in number for this call is +91 22 3300 1500 PIN: 800345#. Other toll numbers are listed in the conference call invite which is posted on the company website archive.biocon.com. The operator will provide instructions on asking questions before the start of the call. A replay of this call will also be available from the conclusion of the call till Nov 3, 2017 on +91 22 3300 2300. PIN: 255147#. Transcript of the conference call will be uploaded on the company website in due course.
DISCLAIMER: This press release may include statements of future expectations and other forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects upon Biocon and its subsidiaries/ associates. These forward-looking statements involve known or unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from our expectations include, amongst other: general economic and business conditions in India and overseas, our ability to successfully implement our strategy, our research and development efforts, our growth and expansion plans and technological changes, changes in the value of the Rupee and other currency changes, changes in the Indian and international interest rates, change in laws and regulations that apply to the Indian and global biotechnology and pharmaceuticals industries, increasing competition in and the conditions of the Indian and global biotechnology and pharmaceuticals industries, changes in political conditions in India and changes in the foreign exchange control regulations in India. Neither Biocon, nor our Directors, or any of our subsidiaries/associates assume any obligation to update any particular forward-looking statement contained in this release.
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