Biocon: One eye on biologics IPO to support blossoming biosimilars

Managing director Kiran Mazumdar-Shaw has told Indian news outlets Biocon could spin-out its biologics division to raise funds for further biosimilar development.

Biocon is Indian’s largest pharmaceutical firm with a portfolio of small molecule and branded formulation products. But the Indian drugmaker has also begun to make its mark on the international biosimilars market with commercialization partner Mylan launching various products in both the US and European markets.

Ogivri became the first biosimilar of Roche’s Herceptin (trastuzumab) to be approved by the US Food and Drug Administration (FDA) in December 2017, and Fulphila became the first US biosimilar of Amgen’s cancer drug Neulasta (pegfilgrastim) when approved last June.

Scientist and entrepreneur Kiran Mazumdar-Shaw is MD and chair at Biocon. Image: Science History Institute, Wikimeda/creativecommons

Biocon fundraising

To support these products and more – Biocon claims to have a pipeline of biosimilars to address a market size of over $60 billion (€53 billion) – the firm has invested heavily in biosimilar R&D and manufacturing capabilities. Last October, for example, Biocon pledged $200 million to build a second monoclonal antibody (MAb) manufacturing plant at its site in Bangalore.

Speaking to Indian business and financial news organization Bloomberg Quint, Kiran Mazumdar-Shaw, chairperson and managing director of Biocon, said her firm continues to invest “very heavily in developing our pipeline of biosimilars” and will look to spinning out its biologics business to help fund this.

“We have clearly indicated that the biologics business will be spun off business in terms of first being a fully-fledged subsidiary, and then we will look at taking it to the market to raise further capital,” she said. “Right now we have adequate capital to back our immediate needs but I think in the near future we will go to the capaitl markets and we will look at other avenues of raising capital as well.”

In another interview with ETNOW this week, Mazumdar-Shaw added Biocon’s biosimilar business is presently “fairly profitable” and accrued profits from biosimilars will be invested back into the business, but if there is a need to ramp-up development there are several avenues the firm is eyeing up to raise cash.

“For instance, we have our investments in [Biocon’s CRO subsidiary] Syngene which we could basically divest to raise capital [or] we can actually take our biologics business to the market for an IPO to raise capital. So I do not think money is going to be a constraint,” she said.

“Biocon does not wish to be a highly leveraged company so we will make sure that we have adequate cash to back these investments.”

Biosimilars in bloom

In both interviews Mazumdar-Shaw said demand for biosimilars is on the rise and Biocon is in an exceptional space to profit.

“The demand for biosimilars is only going to increase and given the fact that biosimilars are not everybody’s cup of tea due to the investment needs and the gestational timelines involved in biosimilars development, we believe there will be a handful of players in not such an aggressive environment which I think gives us a very good opportunity to give us a strong and robust sustainable growth,” she told Bloomberg Quint.

This is, she said, despite a recent aggressive push back from originator companies looking to stall the progress of biosimilars. Biospace lists these as gaming the FDA’s risk evaluation and mitigation strategies, patent expansion, rebate traps, and distorted marketing.

Mazumdar-Shaw said such actions are “kneejerk reactions from the originators” but unsustainable in the mid-to-long-term.

“I don’t think they can sustain it for too long as biosimilar companies have an approach to the market place and marketing strategies will be able to counter these headwinds,” she said, adding it is only “a matter of time before biosimilars garner good market share.”

According to Mazumdar-Shaw, analysts are predicting an uptake of biosimilars over the next few years of up to 70%.

“Biocon and Mylan are right up there in front leading the way with a few others to carve this segment of biosimilars. I for one feel very confident that our biosimilars business is going to really monetize good dividends for us.”

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