Kiran Mazumdar-Shaw, Chairman & Managing Director, Biocon Ltd

India Infoline News Service | Mumbai |

“With a number of our biosimilar & novel programs entering the clinics, we have witnessed an upsurge in our Research & development costs, which indicates potential upsides in the long term.”

Kiran Mazumdar-Shaw, Chairman & Managing Director, Biocon Ltd received a graduate honors degree in Zoology from Bangalore University (1973) and qualified as a Master Brewer from Ballarat University, Australia (1975). Ms Shaw also received an honorary Doctorate of Science in 2004, from her alma mater, Ballarat University, in recognition of her pre-eminent contributions to the field of Biotechnology. She has also been awarded honorary doctorates from University of Abertay, Dundee, U.K. (2007), University of Glasgow, U.K. (2008) and Heriot-Watt University, Edinburgh, U.K. (2008). She recently received an honorary Doctorate of Science by the National University of Ireland (2012) for her contribution to economic life and was also conferred an honorary doctorate by Trinity college Dublin (2012).

Biocon Limited is India’s premier biotechnology company with a strategic focus on biopharmaceuticals and research services. Established in 1978 by Dr. Kiran Mazumdar-Shaw, the Group is an integrated, innovation-driven healthcare enterprise with offerings that traverse the entire drug development value chain. Balancing its novel molecule research pipeline with a diversified product portfolio, Biocon delivers affordable solutions to partners and customers in over 75 countries across the globe. Many of these products have USFDA and EMA acceptance. Stellar products from Biocon’s stable include the world’s first Pichia-based recombinant human insulin, INSUGEN and insulin glargine, BASALOG coupled with a state of the art insulin pen device, INSUPen and India’s first indigenously produced monoclonal antibody BioMAb-EGFR

Replying to Yash Ved of IIFL, Kiran Mazumdar-Shaw says, “With a number of our biosimilar & novel programs entering the clinics, we have witnessed an upsurge in our Research & development costs, which indicates potential upsides in the long term.”

How was the quarter as a whole?

We continue to deliver good performance across verticals this fiscal. At the half year, we have seen a 23% YoY increase in revenues attributable to both volume growth as well as better export realization on account of a depreciating rupee. APIs and Biosimilar Insulins have seen significant business expansion in the emerging markets.

Branded Formulations and Research Services continue to deliver strong growth. R&D expenditure has risen significantly this fiscal and stands at Rs 790mn for H1, a 54% increase over the same period last fiscal. This reflects the progress made by our various Biosimilars and novel molecule programs in the clinic including a European Phase III trial for rh-Insulin which has generated positive interim data.

Whilst this has muted profitability, R&D remains a key investment to drive exponential growth in the future. Imported Raw Materials, Power and Personnel costs have also increased by 27%. Despite this, PAT has grown 8% to Rs1.69bn for H1 this fiscal. We see this growth momentum continuing for the remaining two quarters.

Brief us about your agreement with GE Equity International Mauritius?

Biocon, Asia's premier biotechnology Company, has signed an agreement with GE Equity International Mauritius, a subsidiary of GE Capital Corporation which will make a primary equity investment in its research services subsidiary, Syngene International Limited (Syngene).

As per the terms of the agreement, GE Capital would invest Rs. 1.25bn for a 7.69% equity share in Syngene. The transaction is subject to standard condition precedents including regulatory approvals.

GE Capital’s investment in Syngene, Biocon’s subsidiary, is a validation of our research services business model which has delivered consistent value to our partners as well as other stakeholders. This takes us closer to our commitment of taking Syngene through an IPO at the most opportune time.

Syngene registered nearly Rs 4 bn in FY 12. During H1, FY13, the business continues to gain momentum with sales of nearly Rs 2.50 bn.

When are you planning to list Syngene?

The market conditions are not conducive to list Syngene at this time. We will seek IPO at an appropriate time.

What are your plans for R&D?

R&D is an important integral part of our Company’s business. Our investment in R&D will drive exponential growth in future. Our R& D investment is self financed .

Brief us about your business in different segments?

Our business is driven by five powerful growth accelerators, These are : Small Molecules, Biosimilars, Branded Formulations, Novel Molecules and Research Services.

Small Molecules & Biosimilars

The biopharma business reported a healthy growth of 15% YoY in the first half of this fiscal, led by a strong performance of Immuno-suppressants, Insulins, Fidaxomicin and Orlistat.

Interim results from the Phase III clinical study for Biocon’s biosimilar rh-Insulin in EU, have demonstrated comparable efficacy and safety between our offering and the innovator product. The trial has met its efficacy end point with a comparable immunogenicity and safety profile. The second part of the study evaluating additional safety and immunogenicity parameters is ongoing. These encouraging results will be pivotal in our regulatory and MAA submissions.

Branded Formulations

The branded formulations business continues to build momentum and recorded a robust growth of 45% YoY. Insugen and Basalog, our key brands in Diabetology and Abraxane & BioMAb EGFR, lead brands of Oncology, along with several other molecules of Cardiology, Nephrology, Comprehensive Care and Immunotherapy divisions continued to do well and have contributed to this steady growth. A number of our recent offerings have entered into the Top 3 product rankings in their categories. Notable amongst these are: Psorid (#1), Picon (#2), Tbis (#2) and Albubet (#3).

Novel Molecules

Our Novel Molecules business continued to progress well during the reporting period. We are in advanced stages of finalizing our co-development agreement for IN-105 (Oral Insulin). We have initiated engagement with potential partners for out licensing Itolizumab (Anti CD6 Monoclonal Antibody) for the global markets. We have recently reported positive data for Itolizumab from an India centric Phase III trial for Psoriasis. This has enabled us to file with the DCGI for marketing authorization in India. We intend to initiate further clinical trials for Itolizumab in other promising indications like Multiple Sclerosis, Vitiligo and Rheumatoid Arthritis.

An important development during this quarter is our decision to exit from our partnered program with Amylin Pharmaceuticals following its acquisition by BMS. AC165198, Amylin’s proprietary molecule, was being jointly developed as a novel diabetes treatment agent. A change in control at Amylin provides Biocon with an exit option which it has exercised. This will enable Biocon to focus its resources to other advancing programs.

What is your outlook for the coming quarters?

The business outlook remains positive. With a number of our biosimilar & novel programs entering the clinics, we have witnessed an upsurge in our Research & development costs, which indicates potential upsides in the long term. Our biosimilar Trastuzumab is undergoing a Global Phase I and an India Phase III clinical trial.

A number of our other biosimilar & novel programs are set to move to the next phase in the development cycle like our biosimilar Insulin Glargine that is expected to commence its Global Phase III trial shortly.

What is your current cash level?

Our net cash stood at Rs6.25bn.

Brief us on your financials?

Biocon Ltd has posted a net profit of Rs. 896.50 mn for the quarter ended September 30, 2012 as compared to Rs. 857 mn for the quarter ended September 30, 2011.

Total Income has increased from Rs. 5376.30 mn for the quarter ended September 30, 2011 to Rs. 6419.40 mn for the quarter ended September 30, 2012.

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