Details dribble out on Biocon's Syngene unit ahead of India IPO

A contract research organization's initial public offering in India will be closely watched not only for signs of demand but also as to whether the local market may look anew at its broad biomedical sector.

CRO Syngene had a record quarter, setting up an IPO that saw a Red Herring prospectus filed this week, according to details of parent firm Biocon released this week and the Securities and Exchange Board of India.

As many as 22 million shares will be on offer that could take the company further into R&D and manufacturing services after what Biocon Managing Director Kiran Mazumdar-Shaw said was a record quarter for the unit.

Biocon Managing Director Kiran Mazumdar-Shaw

"Biocon closed the year with a stronger performance in Q4 on the back of a record quarterly performance by our research services subsidiary, Syngene, and an improved performance of our biopharma business," Mazumdar-Shaw said.

Syngene works with clients such as Merck & Co ($MRK) and Bristol-Myers Squibb ($BMY), as well as handling in-house work for Biocon.

An initial filing with the Securities and Exchange Board of India said the listing could come as early as July. Earlier this year, when Biocon sold another 10% stake in the research unit, Syngene was valued at about $600 million.

The Red Herring prospectus fills in a few more details as well as the earnings announced April 29 that saw overall net profit rise nearly 79% to 2.02 billion rupees in the fourth quarter ended March 31.

On an earnings call on April 30, Biocon's Mazumdar-Shaw elaborated.

"We have seen a huge jump in our research services business this quarter, a 27% jump in terms of revenues and in terms of this business as it prepares itself for an initial public offering (IPO), these numbers and growth numbers are indicative of the robustness of this business," she said.

But Biocon is seen as a weather vane for how Indian companies operate at home and how they look abroad, with one report suggesting they exist in India only on paper, with facilities moved to other countries. Regulatory delays get the blame.

Biocon for instance has invested more than $160 million in research and production facilities across the Bay of Bengal in Malaysia. Others are said to be looking to Thailand and the United Arab Emirates in addition to Malaysia.

Still, the company has also said it intends to build a new facility in Vizag, India, for manufacturing insulin products.

- here is the release from the Securities and Exchange Board of India
- and the Biocon earnings release