A technician works at Biocon Ltd.’s cancer drug facility in Bangalore (Photographer: Namas Bhojani/Bloomberg) 

Biocon’s Q2 Profit Halves On Regulatory Hurdles, Higher Costs

Biocon Ltd.’s net profit declined for the third straight quarter, missing analyst estimates due to higher costs at its Malaysia plant and pricing pressures in its active pharmaceutical ingredients business.

The bio-pharmaceutical manufacturer’s net profit fell 53 percent from the last year to Rs 69 crore, according to an exchange filing. This was way below the Bloomberg consensus estimate of Rs 113 crore. Revenue increased 1.5 percent to Rs 968.8 crore, in the same period.

The bottomline was hit by production disruptions as well as regulatory and tender delays, Chairperson and Managing Director Kiran Mazumdar Shaw said in a separate media statement. The company expects these headwinds to ease by the end of this fiscal.

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.
Kiran Mazumdar Shaw, Chairperson and Managing Director, Biocon

Earnings before interest, taxes, depreciation and amortisation dropped 24 percent to Rs 182 crore on a year-on-year basis. The margin contracted to 18.8 percent during the period due to inclusion of fixed and operating costs related to the Malaysia facility and pricing pressure in key markets, Biocon said.

Segmental Revenues

  • Small molecules: Revenue declined 13 percent to Rs 350.5 crore.
  • Biologics: Revenue from this segment was flat at Rs 155.7 crore.
  • Branded formulations: Revenue from this business saw a jump of 29 percent to Rs 175.9 crore.
  • Research services: Income increased 10.62 percent to Rs 335.2 crore.