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L u m p y l i c e n s i n g s l o w s p r o g r e s s …
Biocon’s Q1FY12 numbers were below our expectation due to lower
licensing income (| 14 crore) which was below our expectation of | 37.5
crore. Net sales grew 10.1% to | 441.7 crore below our expectation of |
496 crore on the back of lower growth in the biopharmaceutical business
which grew by 8% to | 354.3 crore. The research services business
witnessed healthy growth of 21% YoY to | 87.4 crore on the back of
expansion by existing clients and addition of new clients. EBITDA margins
remained flat at 27.7% YoY. Higher depreciation coupled with increase in
effective tax rate restricted net profit growth to 7.5% at | 70.1 crore.
Biocon is planning to launch Insulin pen in a few months under the brand
name Insupen in Indian market. We have maintained our BUY rating on
the stock despite a muted quarter. Our analysis is based on ex-Axicorp
numbers in Q1FY11.
ƒ Optimer launched Dificid (Fidaxomicin) in US market
Biocon has started supplying Fidaxomicin API to Optimer from June
2011. Optimer has launched branded Dificid (Antibiotic) in the US
market during recently and plans to launch in the EU market in the
second half of the current fiscal. Biocon is solo supplier to Optimer
for Fidaxomicin. Despite API supplies, we believe Biocon will get
higher margins as Dificid is a patented product.
ƒ Syngene extends research collaboration with Endo Pharmaceuticals
Syngene, a subsidiary of the company, and Endo Pharmaceuticals
US have signed an agreement to expand their collaboration to
develop two novel biologics to treat cancer. Under the agreement,
Endo will retain all rights to the molecules developed while
Syngene will receive research fees, milestone payments and
success fees from Endo.
V a l u a t i o n
Despite fluctuations in licensing income, we expect the company to be on
track to achieve its yearly target for the same. Traction from Fidaxomicin
supplies, launches in the diabetic space and revival in R&D income will
strengthen the justification for higher valuation. We have valued Biocon at
18x FY13E EPS of | 24 i.e. | 432 maintaining our BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L u m p y l i c e n s i n g s l o w s p r o g r e s s …
Biocon’s Q1FY12 numbers were below our expectation due to lower
licensing income (| 14 crore) which was below our expectation of | 37.5
crore. Net sales grew 10.1% to | 441.7 crore below our expectation of |
496 crore on the back of lower growth in the biopharmaceutical business
which grew by 8% to | 354.3 crore. The research services business
witnessed healthy growth of 21% YoY to | 87.4 crore on the back of
expansion by existing clients and addition of new clients. EBITDA margins
remained flat at 27.7% YoY. Higher depreciation coupled with increase in
effective tax rate restricted net profit growth to 7.5% at | 70.1 crore.
Biocon is planning to launch Insulin pen in a few months under the brand
name Insupen in Indian market. We have maintained our BUY rating on
the stock despite a muted quarter. Our analysis is based on ex-Axicorp
numbers in Q1FY11.
ƒ Optimer launched Dificid (Fidaxomicin) in US market
Biocon has started supplying Fidaxomicin API to Optimer from June
2011. Optimer has launched branded Dificid (Antibiotic) in the US
market during recently and plans to launch in the EU market in the
second half of the current fiscal. Biocon is solo supplier to Optimer
for Fidaxomicin. Despite API supplies, we believe Biocon will get
higher margins as Dificid is a patented product.
ƒ Syngene extends research collaboration with Endo Pharmaceuticals
Syngene, a subsidiary of the company, and Endo Pharmaceuticals
US have signed an agreement to expand their collaboration to
develop two novel biologics to treat cancer. Under the agreement,
Endo will retain all rights to the molecules developed while
Syngene will receive research fees, milestone payments and
success fees from Endo.
V a l u a t i o n
Despite fluctuations in licensing income, we expect the company to be on
track to achieve its yearly target for the same. Traction from Fidaxomicin
supplies, launches in the diabetic space and revival in R&D income will
strengthen the justification for higher valuation. We have valued Biocon at
18x FY13E EPS of | 24 i.e. | 432 maintaining our BUY rating.
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