Biocon Biologics, a subsidiary of Biocon, will file for an initial public offer (IPO) within next two years, Executive Chairperson Kiran Mazumdar-Shaw said on Monday.
Biocon Biologics, which has inked a deal to acquire Viatris Inc's biosimilars business for up to $3.33 billion (about Rs 24,990 crore), aims to be a fully integrated global biosimilars company.
"We are ready to advance our biosimilar journey to the next level. This acquisition of Viatris' biosimilar business is an important step to create a leading fully integrated global biosimilars company, setting us up for the next decade of value creation for all our shareholders. We expect to have an IPO of Biocon Biologics with this new structure within the next two years," Mazumdar-Shaw said in an online press conference.
At the last round of funding, the biologics business was valued at $4.9 billion and certainly with this new deal, it jumps to around $8 billion, she stated.
"And obviously, we expect the IPO to be at a very, very attractive level. So if you look at it, it's going to hugely create value for shareholders," Mazumdar-Shaw said.
The Viatris acquisition would help Biocon Biologics become a unique global vertically integrated biosimilars leader, she added.
Mazumdar-Shaw noted the Viatris deal would enable the company to have one of the broadest and deepest commercialised biosimilars portfolios in the industry.
"This transaction will accelerate our direct commercialisation strategy for our current biosimilars portfolio. It will also make us future ready for the next wave of products...fast track our journey of building a strong global brand. Additionally, this strategic combination will prepare us for the next decade of value creation for all our stakeholders through an IPO which is being planned within the next 18 to 24 months," she said.
Mazumdar-Shaw noted that the acquisition enables Biocon Biologics to fill the gaps in its missing capabilities in developed markets, especially around supply chain and commercialisation.
"Our long standing relationship with biologists positions us very well to seamlessly and rapidly integrate and thereby maximise value from this transaction. Additionally, it accelerates our readiness for the next wave of biosimilars which are under development," she said.
The deal would also enable the company to realise regulatory and IP capabilities in developed markets as well as operational efficiencies, she added.
Mazumdar-Shaw said that its biosimilars business has demonstrated success and established global credibility with seven of its molecules having been commercialised worldwide.
"Through our comprehensive biosimilars portfolio we are serving over 3.6 million patients on a yearly basis. And in benefiting patients, we have also generated revenues of $384 million in FY21," she stated.
Biosimilars offer a very attractive global opportunity as it is a class of drugs that has emerged as an effective alternative to reduce the cost of novel biologic therapies.
"Over 1,000 biosimilars and follow on biologics are under development for various therapy areas. Globally, the uptake of biosimilars has increased rapidly. About 65 per cent of all biosimilars approved in the US have gained their approval between 2018 and 2019. Even 50 per cent of biosimilars in Europe were approved between 2017 to 2019 as per an E&Y analysis," Mazumdar-Shaw noted.
This trend looks to continue over the next decade, she said. According to IQVIA, the biosimilar value grew at a CAGR of 78 per cent between 2015 and 2020, reaching around $18 billion in 2020, and is expected to continue to grow at a compound annual growth rate (CAGR) of 15 per cent between 2020 and 2030, reaching an estimated $75 billion within the next decade, Mazumdar Shaw noted.
"And I'm pleased to say that Biocon Biologics is well positioned to have a global play in a major way in biosimilars," she stated. Shares of the company however slumped over 11 per cent to Rs 348.95 a piece on Monday amid concerns of high debt on the company's balance sheet.
Shrugging off concerns regarding high debt exposure on its books, Mazumdar-Shaw noted that debt is at a very manageable level as compared to any other companies.
"I think we have been very, very conservative, if I may say so in terms of our equity, or debt...I am confident not just committed that the present level of debt will certainly come down even beyond what it is today. But I think even at today's level, we are very comfortable to pay off this debt very, very soon," she said.
The Bengaluru-based company has noted that the cash payment of $2 billion for the Viatris deal would be funded by $800 million raised through equity infusion in Biocon Biologics and the remainder would be funded by debt, additional equity or a combination thereof.
Biocon Biologics has received expressions of interest from financial institutions for debt financing and equity commitments from existing shareholders, it added.
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