Visit http://indiaer.blogspot.com/ for complete details Biocon monetizes its insulin portfolio, out licensing of oral insulin awaited.
Biocon capitalizes its first-mover advantage worldwide in biosimilar insulin through a
strategic deal with Pfizer. Upfront payment of US$200 mn does not surprise us given
that Biocon (1) sells biosimilar insulin across emerging markets (10-14% of Biocon’s
sales) and is in lead globally in commercializing in developed markets (has started Phase
III in EU, potential launch date, 2012E) and (2) will remain responsible for development
costs. While launch of insulin in EU is some time away, we believe payments linked to
Pfizer’s sales across developing markets are not likely in FY2012E due to time required
for registration. We believe out licensing of oral Insulin is a strong near-term stock
trigger. We increase PT to Rs430, maintain BUY.
Pfizer gets worldwide commercialization rights to Biocon’s insulin portfolio
As per the deal, Pfizer attains worldwide commercialization rights to Biocon’s insulin portfolio.
Pfizer will have exclusive rights globally; however, in certain markets such as Germany, India and
certain developing markets, Pfizer will have co-exclusive rights. According to Pfizer, Biocon was
selected as a partner due to (1) first-mover’s advantage in biosimilar insulin with products being
sold across emerging markets, (2) Biocon is in the lead globally in bringing biosimilar Insulin to
market across developed markets, and (3) manufacturing scale. According to Pfizer, Biocon has
adequate capacity for Pfizer’s global supplies for next five years. Pfizer expects to commercialize
Recombinant Human Insulin in Europe in 2012 followed by US in 2016.
With Biocon in the lead globally in insulin, upfront payment of US$200 mn does not surprise us
Upfront payment of US$200 mn does not surprise us given that Biocon (1) is in the lead globally in
biosimilar insulin. Biocon is conducting phase III trials for Recombinant Human Insulin in EU and
phase I in US with possible launch date of 2012 in EU and 2016 in US, (2) has two products in
market—human insulin in emerging markets and Glargine in India and two insulin products in
development, and (3) will remain responsible for clinical development, regulatory approval and
supply of products. However, while this payment is not linked to any milestone, we believe it will
be staggered over FY2011-12E. In addition, Biocon will also get payments of up to US$150 mn
and payments linked to Pfizer’s sales across markets worldwide.
We add cash/share to PT, maintain BUY with PT of Rs430, out licensing of oral insulin awaited
While launch of insulin in EU is still some time away, we believe payments linked to Pfizer’s sales
across developing markets is not likely in FY2012E due to time taken to register products. We
believe out licensing of oral Insulin post completion of Phase III trials in India (expected early 2011E)
is a strong near-term stock trigger. We leave our estimates unchanged, add cash/share to our PT.
We maintain BUY with PT of Rs430 (was Rs400).
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