Biocon Q4FY17 Concall Summary

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Key Highlights of this Quarter

  • Marketing authorization applications for Biosimilars – Pegfilgrastim, Trastuzumab and Insulin Glargine have been reviewed and approved by the European Medicines Agency
  • Applications for proposed Biosimilars of Tastuzumab and Pegfilgratim are under US FDA review with target action dates for September and October respectively
  • Biocon’s Malaysian Insulin Plant started commercial sales where Biocon subsidiary Biocon SDN. BHD. has been awarded a 3 year contract of 300 Million for the supply of Human insulin catridges and reusable insulin pens under Malaysian government’s offtake agreement
  • Commercial launch of biosimilar insulin glargine in Japan through FUJIFILM Pharma as a partner on 15th July,2016
  • Received FDA approval for Rosuvastatin Calcium from USFDA, first ANDA approval for Biocon
  • Ranked amongst the top 10 biotech employers, the only Asian company to feature in 2016 Rankings released by Science Career magazine.

Financial Highlights Q4 FY17               

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  • Consolidated Revenues for Q4 FY17  were Rs. 974 Crores, which is flat compared to last year
  • Biocon sales amounted to Rs. 653 Crores which represents a growth of 4%
  • Group EBITDA was at Rs.231 Crores for Q4 FY17 reflecting a growth of 5% 
  • EBITDA margin was at 24%
  • Core margins, i.e. EBITDA margins net of licensing, impact of forex and R&D expenses, stood at 31%.
  • Forex Loss of Rs.17 Crores, on account of restatement of foreign currency denominated assets due to appreciation of rupee against the dollar
  • Total R&D Expenses accounted to 98 Crores, of which 65 Cr in P&L corresponding to 10% of sales excluding Syngene
  • Capitalized Rs.33 crores related to trastuzumab and glargine development expenses.
  • Reported net profit was at Rs.127 Crores representing a net margin of 13%. 
  • Adjusting for exceptional items, the net profit is at Rs.135 crores reflecting a growth of 75% over Q4 of last year

Financial Highlights of FY17

  • Consolidated revenues grew 18% over FY16 to 4,079 crores
  • Biocon sales were at 2,738 crores, representing a strong 20% growth
  • Small Molecule sales were 1,587 crores, a growth of 14%. 
  • Biologics grew 34% to 458 crores
  • Branded Formulations clocked sales of 549 crores which is a growth of 24%. 
  • Licensing income for the year was 144 crores as compared to 108 crores last year. 
  • Research Services (Syngene) sales grew 7% over FY16 to 1,138 crores on a consolidated basis
  • On a standalone basis, Syngene reported sustained revenues of 1,272 crores, EBITDA of 478 crores and a net profit of 287 crores
  • Gross R&D spends at Biocon for the year were 402 crores compared to Rs.427 crores last year
  • 267 crores R&D spend is reported in the P&L representing approximately 10% of Biocon sales excluding Syngene. Rs.135 crores was capitalized during the year.
  • Gross projected R&D spend to remain in the 12%-15% range in FY18.
  • Group EBITDA was at 1,137 crores with EBITDA margins at a very strong 28%.Core margins for the full year stood at 32%. 
  • Reported Net Profit for the year was Rs.612 crores with net profit margin of 15%. Adjusting for exceptional items, net profit was Rs.620 crores reflecting a growth of 54% over FY16

Bonus Shares Issue

  • Board of Directors decided to issue Bonus Shares at a ratio of 2:1 i.e., for 2 bonus shares for every one share held by an individual on the record date. 
  • A final dividend of Rs 3 per share pre-bonus for FY 2016- 17.

Segmental Revenues

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  • On a standalone basis, Syngene reported revenues of 315 Crores, EBITDA of 124 crores and Net Profit of 78 crores
  • Small Molecules sales were Rs.387 crores  for Q4, marginally down from Q4 pf last year
  • Biologics sales were at flat at 119 crores
  • Branded Formulations were at Rs.131 crores , growing by 25% from last year’s Q4
  • Licensing income were at Rs.16 Crores as compared to Rs.10 Crores of last year’s Q4
  • Syngene contributed a sales of Rs.272 crores in Q4, down 14% as compared to Q4 16

Growth in Small Molecules:

  • Growth down marginally in Q4, but showed a robust 14% growth for the full year
  • Growth was largely led by rosuvastatin, pravastatin and immunosuppressant API sales
  • Focus on certain niche API and generic formulation opportunities to sustain long-term growth

Biologics Business:

  • Biologics continued its strong performance in FY17. 
  • Insulin sales for the Malaysian OTA and trastuzumab sales in certain emerging markets drove growth in this segment.
  • Strong licensing income, bulk of it was as a result of partnerships for trastuzumab in emerging markets

Branded Formulations:

  • The performance has been flat on alike-to-like basis
  • Increased competition from low price biosimilar mAbs
  • Introduction of price caps in some key brands by the government in India along with the loss of key in-licensed oncology brand Abraxane, which was withdrawn by the licensor from India and UAE market impacted growth
  • Increase in prescription shares for both our insulin brands Insugen and Basalog in FY17


Syngene Research and Development:

  • Standalone revenue was at a sustained growth of 14% 
  • Operational performance - EBITDA and PAT margins at 38% and 23% respectively for FY17
  • Revenue growth this quarter and for the full year has been impacted by the fire incident that happened in December
  • First phase of the Syngene Research Center has been commissioned
  • A strategic deal has been signed for setting up a dedicated R&D center for Amgen which represents Syngene's fourth dedicated R&D center
  • Syngene added new capabilities in Bioinformatics
  • A strategic partnership with Herbalife Nutrition was also announced as the fifth dedicated center for SyngeneAt
  • Syngene continues its investments to expand its service offerings and building capacities which among others include the commercial manufacturing API facility at Mangalore and a new biologics plant in Bangalore.

Novel Molecules:

  • In diabetes, Biocon's lead program is Insulin Tregopil, a first-in-class oral prandial insulin molecule for post-prandial glycemic control
  • A clinical trial application for Insulin Tregopil has been filed with DCGI, the Indian regulator
  • Clinical developments of novel anti-CD6 monoclonal antibody, Itolizumab, continues in Australia
  • Stage 2 of a Phase I clinical study using a subcutaneous form of Itolizumab is scheduled to start very shortly
  • QPI-1007, a novel SiRNA molecule to treat non-arteritic ischemic optic neuropathy or NAION, which is based on Quark Pharma's SiRNA technology platform continues to make progress


R&D highlights:

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  • Five regulatory filings across the U.S. and EU for a few of products by various Biosimilar programs
  • Completed the ROW-focused Phase III trial in metastatic colorectal cancer for our proposed biosimilar bevacizumab. 
  • Submitted a Marketing Authorization Application for the same with DCGI in India
  • Additional Phase III global trial has also commenced in non-small cell lung cancer. 
  •  As part of insulins portfolio, Marketing Authorization Application for Insulin Glargine with the US FDA is expected very shortly. 
  • Other molecules from our insulin analogs portfolio, Insulin Aspart and Insulin Lispro are also advancing.
     

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