Q4FY23 Review: Biocon: All eyes on Humira launch

25 May 2023 , 11:22 AM

Biocon’s Q4 operating Ebitda, ex-licensing income of Rs1.75bn, was in line with our estimates. Muted margin performance in Biologics business was offset by strong sequential ramp-up in Syngene, on the back of its Zoetis contract. While mgmt didn’t provide any guidance, analysts of IIFL Capital Services assume Biologics revenue to increase from USD940mn annual run-rate to USD1.14bn in FY24, driven by USD100mn revenue contribution from the US launch of Humira (1st July) and 10% growth in base Biologics business. With Amgen’s ramp-up in Humira being underwhelming (only USD80- 100mn sales expected during 6-month exclusivity), there could be downside risks to their Humira revenue assumptions of USD100/250mn for Biocon in FY24/25. Execution in Humira remains critical for Biocon’s stock performance and deleveraging efforts.

Humira and Aspart remain critical to drive growth in FY24/25: 

Mgmt highlighted that Amgen’s ramp-up in Humira has been slow, as payers are waiting additional companies to launch in July, while there has been strong interest from specialty pharmacies for Biocon’s upcoming launch. Analysts of IIFL Capital Services Humira estimates assume 2-4% MS and 45-50% price erosion, thereby translating into USD100/250mn revenue in FY24/25. Aspart could also become a niche USD100mn opportunity for Biocon, assuming that product approval is received by CY23-end (Malaysia plant’s USFDA re-inspection likely in Q2FY24).

Equity fund raise in BBL to hinge on successful execution in Humira and will be critical to drive the company’s deleveraging efforts. Biocon’s reported net debt reduced QoQ from USD2.1bn to USD1.8bn, aided by USD130mn Kotak structured deal and USD150mn equity infusion by Serum. With BBL’s net debt/Ebitda being ~4.5x FY25, Biocon is looking to further dilute stake from 70% to 60%.

Analysts of IIFL Capital Services downgrade FY24/25 EPS by 22/7% to account for termination of the Serum Vaccines deal and higher D&A/interest expenses. Biocon’s overall Ebitda margins will likely improve from ~23% in FY23 to ~25% in FY25 driven by the upcoming launches of Humira and Aspart.