BIOCON - Biocon Ltd. Share Price

Outlook and Major Points from Biocon Management:

1. Growth Transition and Visibility:
Management maintains a positive outlook, expecting a transition to growth in the second half of FY25 and into FY26. Improved visibility across all businesses is driven by regulatory clearances, new product launches, and operational execution.

2. Biosimilars Business:

• Strong Momentum: Sustained double-digit growth (14% YoY) in Q3, with key products like Ogivri (Trastuzumab) and Fulphila (Pegfilgrastim) gaining market share in the U.S. (22% and 23% shares, respectively).
• Upcoming Launches: Ustekinumab (Stelara biosimilar) to launch in the U.S., EU, and Japan in Q4 FY25. Bevacizumab and Aspart approvals in the U.S. expected post-FDA site clearances. Denosumab BLA filed in the U.S.
• Margins: Core EBITDA margins at 22-23%, supported by cost optimization and vertical integration.

3. Generics Business:

• Recovery Drivers: Sequential growth (10% QoQ) expected to continue with Liraglutide (GLP-1 generic) launches in the U.K./EU (Q4 FY25) and the U.S. (mid-2025). Semaglutide (GLP-1) development completed; filings in key markets targeted for 2026.
• Operational Wins: U.S. FDA cleared Bengaluru API sites; Cranbury facility qualified for statin production.

4. Research Services (Syngene):

• Return to Growth: 11% YoY revenue growth in Q3, with broad-based recovery across divisions. EBITDA margin improved to 31%.
• Outlook: Stabilizing U.S. biotech demand and China+1 strategy driving contract conversions for long-term growth.

5. Financial Highlights:

• Group Revenue: INR 3,821 crore (10% YoY growth, ex-divestments).
• Core EBITDA: INR 1,007 crore (26% margin), with debt management prioritized post-Viatris milestone closures.

6. Strategic Focus:

• Regulatory Milestones: FDA VAI status for key manufacturing sites paves the way for critical approvals.
• Debt Management: Focus on deleveraging while funding growth.

Key Catalysts: New biosimilar launches (Stelara, Bevacizumab, Aspart), Liraglutide/Semaglutide rollouts, and Syngene's margin expansion.

Question 1 (Damayanti Kerai - HSBC):
What is the potential uptake expectation for biosimilar Ustekinumab (Stelara) in the U.S., considering it is a Part D product and dynamics similar to Humira biosimilars?

Answer:
Biocon anticipates strong global uptake for Ustekinumab, leveraging competitive positioning and lessons from prior biosimilar launches. The U.S. team emphasized strategic customer engagement and confidence in immunology portfolio synergies. Margins remain stable despite forex impacts, with growth driven by volume, not low-margin channels.

Question 2 (Neha Manpuria - BofA):
What is Biocon's diluted stake in Biocon Biologics (BBL) post the 1.5% stake purchase, and how is net debt impacted? What drives Generics' recovery?

Answer:
Biocon's stake in BBL increased to ~72%. Net debt rose to ~USD 1.3B due to bridge loans. Generics growth will stem from Liraglutide launches in EU/U.K. (Q4 FY25) and the U.S. (mid-CY25), alongside API volume recovery and new U.S. product launches, targeting mid-teens growth in FY26.

Question 3 (Shyam Srinivasan - Goldman Sachs):
Why don't biosimilar revenue growth rates align with market share gains? How is capital allocation balancing debt and subsidiary stakes?

Answer:
Revenue-growth vs. market-share disparity reflects expected price erosion and divested India Branded Formulations' impact. Debt management prioritizes growth investments (e.g., facility clearances, product launches), with Syngene stake maintained at ~52%. BBL's IPO remains a debt-reduction lever.

Question 4 (Amey Chalke - JM Financial):
What is Biocon's status on Semaglutide (Sema) development, and how will insulin capacity expansion aid growth?

Answer:
Sema development is progressing, with U.S. DMF filings, bioequivalence studies, and planned FY26 submissions. Insulin drug-product capacity will double by Q1 FY26, supporting global demand. Biocon aims to be a top insulin player, leveraging vertical integration and device strategies.

Question 5 (Love Sharma - JP Morgan):
How are investor liquidity options tied to BBL's IPO being managed, and how was the Viatris settlement funded?

Answer:
Biocon is aligning with investors via ongoing discussions, with an IPO remaining a key option. The USD 160M Viatris milestone payment was settled using existing liquidity and receivables adjustments, closing all deferred obligations.

Question 6 (Surya Patra - Phillip Capital):
How prepared is Biocon for Ustekinumab's launch, and what is Denosumab's timeline? How critical are China's Tacrolimus approval and the Cranbury facility?

Answer:
Ustekinumab's U.S. launch preparations include pre-negotiated contracts and Part D strategies. Denosumab's filings are underway globally, targeting 2026 launches. Tacrolimus in China and the Cranbury facility enhance market access and U.S. government contract eligibility, respectively.

Question 7 (Vivek Agrawal - Citi):
Are biosimilar margins conservative given new launches, and what are Semaglutide's approval timelines?

Answer:
Margins (22-23%) reflect R&D investments but may improve with high-value launches like Ustekinumab. Semaglutide approvals in Canada, Brazil, and India are expected from late 2026, with U.S./EU filings progressing.

Question 8 (Nitin Agarwal - DAM Capital):
What is Biosimilars' geographic revenue split, and how will insulin compete amid GLP-1 focus?

Answer:
Revenue splits: ~40% North America, ~35% Europe/Japan/Australia, ~25% emerging markets. Insulin demand remains robust despite GLP-1 buzz, with Biocon's integrated capacity and device strategy securing long-term competitiveness.

Question 9 (Bharat Seth - Quest):
What is Biosimilars' long-term growth outlook, and how will Generics improve margins?

Answer:
Biosimilars aim for 75%+ CAGR (FY23-FY28) via 5 U.S. and 3 global launches. Generics' margin recovery (10-14%) hinges on Liraglutide/Semaglutide launches, cost optimization, and Vizag facility utilization.

Question 10 (Alankar Garude - Kotak):
How will R&D spends trend, and what is the Vizag facility's role?

Answer:
R&D (7-9% of revenue) will fluctuate with clinical trial phases. Vizag diversifies API production, serving captive and external customers, with new immunosuppressant products enhancing utilization.