Bangalore-based Indian drugmaker Biocon drew some brickbats from analysts after third-quarter earnings were released because of disappointing progress in sales of biopharma products, prompting management to go into details about plans to grow the business.
Last week, Biocon said net profit in the financial third quarter rose to 1.03 billion rupees ($15 million), from INR909 million in the same period a year ago on net sales of INR8.28 billion.
"Overall revenue grew 9% (year-on-year) to INR8.3 billion, affected by dismal performance in biopharma and India branded businesses," India-based Moltilal Oswal Securities said in a Jan. 22 note to clients.
The biopharma segment (excluding India) grew only 6% (year-on-year) to INR4.5 billion whereas India branded business remained flat at INR1 billion. India branded sales were affected by product rationalization efforts and lower sales of in-licensed products. Biopharma sales were also low on the back of (1) pricing pressure on older API portfolio, (2) higher exposure to Middle East (credit issues) and (3) continued capacity constrains in the insulin business."
A bright spot was the Syngene CRO unit spun off last July in an initial public offering in India that raised around $95 million to fund the development of biosimilar candidates, among other plans.
"Syngene's contract research business grew 23% (year-on-year) to INR2.7 billion and is likely to maintain its growth rate over the next two years. Overall, we project 12% (year-on-year) revenue growth over FY15-18," Moltilal Oswal said, even as it put a sell recommendation on the shares.Biocon managing director Kiran Mazumdar-Shaw
On a Jan. 21 earnings call, Biocon Chairwoman and Managing Director Kiran Mazumdar-Shaw got straight to the point about efforts to trim the existing business and move into biosimilars.
"The biopharma business, as I mentioned earlier, shows a topline growth of 4%, but we have seen marked improvement in the quality of earnings on account of a better sales mix and progress in partnering our biosimilar assets in key emerging markets," Mazumdar-Shaw said on the earning call.
"This has been supported by increased contributions from immunosuppressants and insulins and licensing income derived from licensing trastuzumab and (insulin) glargine in key emerging markets."
But she said the big news for the company going forward is that several insulin and biosimilar candidates in advanced clinical trials open new avenues for the firm.
"Now, coming to insulins and biosimilar programs, I think this is a very exciting year for Biocon as we are fetched to file several regulatory filings with U.S. FDA and EMA this year," Mazumdar-Shaw said.
"Our partnered biosimilar program continues to make good clinical progress and of the nine programs that are partnered with Mylan, we have four programs in global phase-III trials, while the fifth program is advancing as per plan in the global Phase-I trial. Based on the clinical advancement thus far, the Biocon-Mylan biosimilars partnership is progressing well towards four regulatory filings in the U.S. and EU in this calendar year, representing an opportunity of over $30 billion. These filings should provide us with an early-mover advantage for these products in these key developed markets."
The company last year said pegfilgrastim and adalimumab entered global Phase III clinical trials and a similar stage for trastuzumab is progressing in more than 100 sites around the world. The company also has a Phase III trial for insulin glargine and a novel diabetes candidate under development.
"Now, coming to novel programs, I am very pleased to share with you that when it comes to our Oral Insulin program which henceforth shall be referred to as Insulin Tregopil, we have reported some very positive clinical [data which] comes from a wave of Phase-I studies, which were concluded late last year," she said on the earnings call.
"These provide us the basis to move forward for the next phase of clinical development of this very important molecule."
The Phase I studies were conducted in the U.S. under a U.S. IND and were initiated in partnership with Bristol-Myers Squibb ($BMY), prior to the divestment of the diabetes franchise to AstraZeneca ($AZN). Subsequent development of Insulin Tregopil, that is the next phase of clinical studies, will be undertaken by Biocon.
- here's the release