Biocon In Talks With More PE Firms For Investment In Biologics Business: Kiran Mazumdar-Shaw
Biocon Ltd. is in discussion with a few more private equity firms for investment in its biologics business before it goes public within the next two years.
“This is a very capital-intensive business. This depends so much on R&D and being vertically integrated. We want to be a vertically-integrated biosimilars company in the foreseeable future… So, we have to make those investments. We do look at private equity at this stage to allow us to make those capital allocations and not be too leveraged,” Kiran Mazumdar-Shaw, executive chairperson at Biocon, said in an interview with BloombergQuint’s Niraj Shah. “We are in a very fine and fit position when we go to the market eventually for the IPO (initial public offering) where we will use these inflows to support our R&D pipeline.”
Tata Capital Growth Fund has invested $30 million, or Rs 225 crore, in Biocon Biologics India Ltd. for an equity stake of 0.85%, valuing the unit at $3.5 billion, the company has said in an exchange filing accompanying the second-quarter results. In January, True North acquired a 2.44% minority stake in the pure-play biosimilars company for Rs 536.25 crore ($100 million), valuing the subsidiary at $3 billion.
Biocon, according to a PTI report, aims to list its biosimilars unit—hived off in March 2019—in the next two to three years. It aims to achieve an annual sales target of $1 billion by financial year 2022.
Biocon witnessed a 12% year-on-year rise in revenue from its research services, followd by 11% growth in biosimilars and 8% in generics business. But higher research and development expenses, staff costs and forex losses dented its profitability.
The company’s profit declined 23% over the year ago to Rs 174 crore in the quarter ended September. Its total revenue increased 11% to Rs 1,745 crore.
“I was a little disappointed as I expected a much stronger performance in biologics. It was a little below par, largely on account of operational issues, which are behind us now,” Mazumdar-Shaw said. “Overall, we have done very well but we could have done better.”
The company, she said, expects to see recovery in the biologics business in the third quarter. “Remain confident that third and fourth quarters should see stronger set of numbers.”
Watch the full interview here: