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Biocon Ltd
In-line F2Q12; EW
Quick comment – In-line quarter: Biocon reported
21% YoY growth in total revenue to Rs5.1bn, driven by
performance across segments. However, operating
margin compressed 460bp, driven by higher raw
material, staff, and R&D expenses. These factors along
with a higher tax rate resulted in 4.6% YoY growth (ex
Axicorp) in net income to Rs857mn (MSe Rs868mn).
Key product opportunities in the near team:
1) Insulin pen device: Biocon has launched its reusable
insulin pen device in the Indian market. It offers benefits
to patients including low wastage and cost savings in
insulin. 2) Fidaxomicin: According to Biocon
management, based on the feedback post the launch,
Optimer has increased the peak sales forecast for
fidaxomicin to US$2bn, which could lead to supply ramp
up for Biocon. 3) Atorvastatin: Biocon has tied up four
players for the European market and two players for the
US market for supply of atorvastation. It expects to enter
a few additional European markets post the patent
expiration in November 2011.
Update on key deals: 1) Pfizer: Pfizer has launched its
insulin and glargine in the Indian market. 2) Mylan -
Without detailing specifics, management highlighted
that the deal is on track.
Other highlights: Oral insulin - Biocon is currently
designing the next clinical trial for its novel oral insulin
candidate (IN105). It hopes to out-license the product by
the end of F2011. Biosimilar opportunity – According to
management, US$50bn of brand sales will go off patent
by 2018, and Biocon (along with its partners Mylan and
Pfizer) is prepared to benefit. Branded formulations –
Management expects its domestic branded formulations
to continue to outperform industry growth rate, driven by
its focus in high-growth specialty areas.
Retain our EW rating: We retain our EW rating in view
of the lack of a near-term product pipeline and distant
monetization timeframe for insulin/ MAbs in the
regulated markets.
Highlights from the earnings call:
• Launch of insulin delivery device under the brand
name INSUPen: Biocon launched its insulin pen
device in the Indian market. It acquired this from a
German company. Biocon’s pen device is priced at
Rs675. According to management, the device offers
various benefits including the ability to reverse excess
units filled and cost savings of Rs1,500 p.a. for its
human insulin and 50% cost saving for its human
insulin analog. Management expects Biocon’s share
in the insulin segment to ramp up significantly post the
launch of its re-usable pen device.
• Update on Pfizer deal: Biocon’s marketing partner
for generic insulin, Pfizer, launched insulin and
glargine in the Indian market during the quarter.
According to the company, the pricing of the product
is similar to that of Biocon’s products.
• Update on Mylan deal: Without disclosing any
specific details, management highlighted that the
operation is on track and management expects to
launch its key molecules identified on time.
• Update on oral insulin molecule: Biocon is
currently designing its next clinical trial program for its
oral insulin candidate (IN105). At the same time, it is
looking to out-license the product and will consult with
its partner before beginning the trials. Management
hopes to out-license the molecule by the end of
F2011.
• Branded formulations segment: Biocon’s branded
formulations business reported revenue of Rs647mn,
up 35% YoY, 14% QoQ. India contributes over 90% of
the branded formulations segment. Management
expects the outperformance vs. the industry growth
rate to continue given its focus on high-growth
specialty areas.
• Fidaxomicin update: According to Biocon
management, Optimer has increased its peak sales
forecast to US$2bn for fidaxomicin based on the
feedback post the launch in US, which could lead to
supply ramp up for Biocon. To recap, Biocon is the
sole API supplier of fidaxomicin to Optimer.
• Atorvastatin opportunity: Biocon has tied up with
four partners to supply of atorvstatin for the European
market. It expects to enter additional markets in
Europe in November 2011 post the patent expiration.
It has also tied up with two players for the US market.
• Biosimilar opportunity: According to management,
by 2018, US$50bn of brand sales will go off patent,
globally. Further, given the entry barriers (complexity,
initial large investments), management believes that
biosimilars will have a low competitive landscape and
Biocon (along with its partners Mylan and Pfizer) is
prepared to benefit from these opportunities.
• Strong performance from research services:
Research services business generated revenue of
Rs928mn, up 18.7% YoY and 6.2% QoQ, driven by
both existing customers and new customers additions.
Further, this segment garnered net income of
Rs240mn vs. breakeven in F2Q11.
• Licensing income: Biocon recorded licensing
income of Rs365mn in F2Q12, largely pertaining to
Pfizer deal. Licensing income contributed Rs60mn to
net income. In F2Q11, licensing income recorded was
Rs231mn and had no corresponding development
expenses. Similarly for F1H12, licensing income was
Rs511mn and corresponding net income was
Rs110mn.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Biocon Ltd
In-line F2Q12; EW
Quick comment – In-line quarter: Biocon reported
21% YoY growth in total revenue to Rs5.1bn, driven by
performance across segments. However, operating
margin compressed 460bp, driven by higher raw
material, staff, and R&D expenses. These factors along
with a higher tax rate resulted in 4.6% YoY growth (ex
Axicorp) in net income to Rs857mn (MSe Rs868mn).
Key product opportunities in the near team:
1) Insulin pen device: Biocon has launched its reusable
insulin pen device in the Indian market. It offers benefits
to patients including low wastage and cost savings in
insulin. 2) Fidaxomicin: According to Biocon
management, based on the feedback post the launch,
Optimer has increased the peak sales forecast for
fidaxomicin to US$2bn, which could lead to supply ramp
up for Biocon. 3) Atorvastatin: Biocon has tied up four
players for the European market and two players for the
US market for supply of atorvastation. It expects to enter
a few additional European markets post the patent
expiration in November 2011.
Update on key deals: 1) Pfizer: Pfizer has launched its
insulin and glargine in the Indian market. 2) Mylan -
Without detailing specifics, management highlighted
that the deal is on track.
Other highlights: Oral insulin - Biocon is currently
designing the next clinical trial for its novel oral insulin
candidate (IN105). It hopes to out-license the product by
the end of F2011. Biosimilar opportunity – According to
management, US$50bn of brand sales will go off patent
by 2018, and Biocon (along with its partners Mylan and
Pfizer) is prepared to benefit. Branded formulations –
Management expects its domestic branded formulations
to continue to outperform industry growth rate, driven by
its focus in high-growth specialty areas.
Retain our EW rating: We retain our EW rating in view
of the lack of a near-term product pipeline and distant
monetization timeframe for insulin/ MAbs in the
regulated markets.
Highlights from the earnings call:
• Launch of insulin delivery device under the brand
name INSUPen: Biocon launched its insulin pen
device in the Indian market. It acquired this from a
German company. Biocon’s pen device is priced at
Rs675. According to management, the device offers
various benefits including the ability to reverse excess
units filled and cost savings of Rs1,500 p.a. for its
human insulin and 50% cost saving for its human
insulin analog. Management expects Biocon’s share
in the insulin segment to ramp up significantly post the
launch of its re-usable pen device.
• Update on Pfizer deal: Biocon’s marketing partner
for generic insulin, Pfizer, launched insulin and
glargine in the Indian market during the quarter.
According to the company, the pricing of the product
is similar to that of Biocon’s products.
• Update on Mylan deal: Without disclosing any
specific details, management highlighted that the
operation is on track and management expects to
launch its key molecules identified on time.
• Update on oral insulin molecule: Biocon is
currently designing its next clinical trial program for its
oral insulin candidate (IN105). At the same time, it is
looking to out-license the product and will consult with
its partner before beginning the trials. Management
hopes to out-license the molecule by the end of
F2011.
• Branded formulations segment: Biocon’s branded
formulations business reported revenue of Rs647mn,
up 35% YoY, 14% QoQ. India contributes over 90% of
the branded formulations segment. Management
expects the outperformance vs. the industry growth
rate to continue given its focus on high-growth
specialty areas.
• Fidaxomicin update: According to Biocon
management, Optimer has increased its peak sales
forecast to US$2bn for fidaxomicin based on the
feedback post the launch in US, which could lead to
supply ramp up for Biocon. To recap, Biocon is the
sole API supplier of fidaxomicin to Optimer.
• Atorvastatin opportunity: Biocon has tied up with
four partners to supply of atorvstatin for the European
market. It expects to enter additional markets in
Europe in November 2011 post the patent expiration.
It has also tied up with two players for the US market.
• Biosimilar opportunity: According to management,
by 2018, US$50bn of brand sales will go off patent,
globally. Further, given the entry barriers (complexity,
initial large investments), management believes that
biosimilars will have a low competitive landscape and
Biocon (along with its partners Mylan and Pfizer) is
prepared to benefit from these opportunities.
• Strong performance from research services:
Research services business generated revenue of
Rs928mn, up 18.7% YoY and 6.2% QoQ, driven by
both existing customers and new customers additions.
Further, this segment garnered net income of
Rs240mn vs. breakeven in F2Q11.
• Licensing income: Biocon recorded licensing
income of Rs365mn in F2Q12, largely pertaining to
Pfizer deal. Licensing income contributed Rs60mn to
net income. In F2Q11, licensing income recorded was
Rs231mn and had no corresponding development
expenses. Similarly for F1H12, licensing income was
Rs511mn and corresponding net income was
Rs110mn.
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