|Biocon CEO Kiran Mazumdar-Shaw|
In an earnings call this year, Biocon founder and CEO Kiran Mazumdar-Shaw discussed the need to sell off 10% to 15% of the company's research services arm Syngene through an initial public offering to raise needed cash for research as well as to pay for production expansion. Now the Indian company has notified investors that Syngene will build a new active pharmaceutical ingredient plant in Mangalore.
The announcement to the Bombay Stock Exchange said Biocon is buying 40 acres in a special economic zone (SEZ) and that the "land would be used for setting up commercial scale facilities to manufacture novel active pharmaceuticals ingredients, advance ingredients and agro chemical for Syngene's client," the Hindu Business Line reports. There were no other details about size or cost.
In the company's earnings call in January Mazumdar-Shaw said that the "proceeds from the offer of sale will help fund Biocon's requirement for cash, both for its R&D and CapEx requirements."
She said expansion costs on things like a $200 million insulin plant it is building in Malaysia had affected the company's bottom line and that selling shares in Syngene can help address that. The company last year sold about 10% of the contract research organization to a private equity investor. Sources have told Reuters that the Syngene IPO could raise about 10 billion rupees ($159.8 million).
During an interview last fall at CPhI in Paris, Mazumdar-Shaw told FiercePharmaManufacturing that Biocon needed to also increase its capacity for the production of biosimilars. It and partner Mylan ($MYL) have already brought to market in India a biosimilar of Roche's ($RHHBY) trastuzumab, essentially Herceptin.