Biocon Q1FY19 Concall Summary


Key highlights

  • Biocon’s partnered biosimilar, pegfilgrastim, Fulphila, received approval from the U.S. FDA last month.
  • Biocon’s partner, Mylan, has launched the product in the U.S. as the most -- as a more affordable therapy option for cancer patients undergoing chemotherapy.
  • Biocon's sterile drug product manufacturing facility for biologics in Bengaluru received EIR from U.S. FDA and the EU GMP certification during the quarter.
  • Biocon presented PK-PD data on our Novel Insulin Tregopil at the American Diabetes Association scientific sessions in the U.S. And Syngene extended and expanded their agreement with the Baxter global R&D center until 2024.

Financial Highlights

Biocon Q1FY19 Segmental figures.png
  • Total consolidated revenue for the quarter were INR 1,193 crores, up 21% compared to last year.
  • Revenue from operations were INR 1,124 crores, which were up 20% as compared to last year. This includes licensing income of INR 5 crores this quarter as compared to INR 8 crores in Q1 of last year.
  • Segment perspective
    • Small Molecules, the segment revenue was up 10% to INR 400 crores.
    • Biologics grew 36% to INR 250 crores and Branded Formulations grew 13% to INR 147 crores.
    • Syngene revenues were up 39% at INR 406 crores in Q1.
  • Biocon incurred gross spend of INR 88 crores on R&D this quarter, corresponding to 12% of revenues, excluding Syngene.Of this amount, INR 44 crores is reported in the P&L.
  • Biocon capitalized an amount of approximately INR 44 crores related to our biosimilars and insulin analog development expenses.
  • The gross spends are lower than last year due to timing of some of the activities on a quarterly basis. The amount in the P&L has reduced on account of capitalization of bevacizumab-related expenses, which were reflected in the P&L in Q1 of last year.
  • Biocon booked a Forex gain of INR 39 crores this quarter as compared to INR 17 crores in Q1 of last year. This gain is reflected in the other income line of the P&L. Of the total amount, INR 28 crores is coming from Biocon while the rest is attributable to Syngene.
  • Group EBITDA grew 25% to INR 307 crores, with EBITDA margins at 26%. Core margins, that is EBITDA margins net of licensing impact of ForEx and R&D, stood at 27%. Reported net profits were up 47% this quarter at INR 120 crores, which represents a net profit margin of 10%.
  • The effective tax rate at 27% for the quarter is slightly lower than last year of 28% due to lower losses in overseas subsidiaries during the period under review. 
Biocon Q1YF19 YoY performance.png

Segment-wise Analysis

Small Molecules Segment

  •  The revenue growth of this segment was led by key APIs and increased generic formulation sales.
  • Higher sales of immuno-suppressants and increased market share of Rosuvastatin formulation in the U.S. were key contributors.
  • Biocon also launched simvastatin tablets in the U.S. market during the quarter.
  • Several drug multipliers were filed in developed and key emerging markets during the quarter, centering on Small Molecule's API pipeline


  • This segment was led by higher sales of biosimilar monoclonal antibodies in emerging markets, supported by the Insulin business
  • The primary driver for growth this quarter was trastuzumab with strong retail market uptake witnessed in Brazil and robust market shares in certain markets in the [LATMEX] region
  • Biocon’s Insulins portfolio continue to improve its market share in several emerging markets
  • The recent launch of pegfilgrastim by Biocon’s  partner, Mylan, in the U.S. and Insulin Glargine sales in EU and Australia, which are planned for later this fiscal, are expected to provide a further tailwind to this segment performance.
  • Biocon is confident of achieving the $200 million target revenue for this segment in FY '19.

Branded Formulations Segment

  • In Q1, the growth in Branded Formulations segment, which comprises product sales in India and U.A.E, was led by growth in the India Branded Formulations business.
  • India Business
    • The India business growth this quarter benefited from the lower base last year in the same quarter due to GST implementation. Metabolics, Nephrology, Immunotherapy and Comprehensive Care divisions aided the business performance with strong growth reported for some of our key brands.
  • UAE Business
    • In the U.A.E., the business continue to garner market share in the Metabolics segment to increase sale of in-licensed products of Insulin Glargine, which was introduced recently.


  • In terms of research services, Syngene recorded a strong growth this quarter.
  • The growth was driven by good performances within biologics manufacturing, discovery services and chem dev services.
  • Syngene also announced the extension and expansion of their agreement with the Baxter global R&D center until 2024. They also announced the recommissioning of Phase I of the upgraded [S2] facility, which was damaged due to a fire incident in December 2016. The progress made provides good visibility on underlying growth expectations for Syngene for this year and the long term.

Product development updates

  • In Europe, the regulatory review of Biocon’s Marketing Authorization Applications or MAA for biosimilar trastuzumab and pegfilgrastim are progressing well, and the decision by CHMP is expected by the end of calendar year 2018.
  • For the U.S. market, Biocon and Mylan are generating additional clinical data for Insulin Glargine in support of the manufacturing site change from Bengaluru to Malaysia.
  • As part of Biocon’s novel molecule portfolio development program for Insulin Tregopil, our oral insulin candidate. Insulin Tregopil advanced in pivotal Phase II, Phase III study in Type II diabetes with more patients in India being randomized during the quarter.

Business updates for Q1FY19

  • Biocon able to increase sales in the Small Molecules segment despite challenges persisting in the generics industry.
  • Branded Formulations also grew in double digits, and a better performance expected  from this segment this year.
  • The growth segments, namely Biologics and Syngene, have made a strong start building upon the traction from last quarter.
  • Recent and upcoming launches of biosimilars, coupled with traction in the research services, provide us a good launch pad to accelerate growth in the subsequent quarters during this financial year.


Other Concall Summaries of Biocon

Biocon Q4FY18 Concall Summary


Financial Highlights


  • Total Consolidated Revenues for the year were at Rs.4336 crores, up 6% compared to the previous fiscal.
  • Revenues from Operations were Rs.4130 crores, which reflects a growth of 5% compared to the previous fiscal. This includes licensing income of Rs.23 crores as compared to Rs.145 crores the previous year.
  • Biocon incurred a gross R&D spend of Rs.380 crores this year. Of this amount, Rs.216 crores is reported in the P&L corresponding to 8% of revenues excluding Syngene. They capitalized an amount of Rs.165 crores as compared to Rs.135 crores in FY2017.
  • Biocon booked a forex gain of Rs.83 crores this year, compared to a loss of Rs.3 crores the previous year. Major gains amounting to Rs.74 crores were booked in Syngene.
  • Group EBITDA stood at Rs.1035 crores for the year, down 9% with an EBITDA margin of 24%. Core margins that is EBITDA margins net of licensing, impact of forex, and R&D stood at 27%.
    Reported Net Profit for the year was Rs.372 crores, which represents a Net Profit margin of 9%.
  • The effective tax rate for the full year at 26% again appears higher than last year of 19%.
  • The Board of Directors have recommended for approval by the shareholders, a Final Dividend of Re.1 per share (20% of face value of each share) for the financial year 2017-18.


Biocon Q4FY18 Financial Highlights.png
  • Total Consolidated Revenues for the quarter of Rs.1237 crores, which is up 27% compared to last year.
  • Revenues from operations were at Rs.1170 crores, which reflects a growth of 26% compared to last year. This includes licensing income of Rs.2 crores this quarter compared to Rs.16 crores in Q4 last fiscal.
  •   Biocon incurred gross R&D spends of Rs.98 crores this quarter. Of this, Rs.51 crores is reported in the P&L corresponding to 7% of revenues excluding Syngene. We capitalized an amount of Rs.47 crores related to their biosimilars and insulin analogs development expenses.
  • Biocon booked a forex gain of Rs.42 crores this quarter as compared to a loss of Rs.17 crores in Q4 last fiscal. This gain is reflected in the ‘other income’ line of the P&L statement.
  • Group EBITDA was at Rs.300 crores for this quarter, with EBITDA margin at 24%. Core margins, i.e. EBITDA margins net of licensing, impact of forex and R&D stood at 26%.
  • Reported Net Profit for the quarter was Rs.130 crores, which represents a Net Profit margin of 11%.
  • The effective tax rate at 21% for the quarter appears higher than last year tax rate of 2% last year as they had utilized R&D incentives and deferred tax asset for the full year in Q4 of last year.

Key Busines Highlights of the year

  • Biocon’s partner Mylan received approval for Ogivri™, Biocon’s partnered biosimilar Trastuzumab from the USFDA in December 2017. It became the first company from India to get its biosimilar approved by the USFDA and their biosimilar Trastuzumab also received approval in Brazil through Biocon’s partner Libbs Farmaceutica. Subsequently an approval in Turkey was also received.
  • Mylan and Biocon also received approval from the European Commission and Therapeutic Goods Administration (TGA) Australia, for Semglee™, which is their biosimilar Insulin Glargine. Semglee™ is expected to be launched by their partner Mylan in Australia and Europe in the second half of this year.
  • Biocon and Mylan agreed to accelerate the introduction of biosimilar Adalimumab in Europe through Mylan’s in-licensing arrangement with Fujifilm Kyowa Kirin Biologics or FKB. FKB’s product is at an advanced stage of review with EMA and could potentially obtain approval in Europe in the second half of 2018.
  • Biocon and Mylan have also agreed to expand their longstanding collaboration with the addition of two next generation biosimilar programs with Insulin Glargine 300 units/ml and Pertuzumab.
  • Syngene, Biocon’s Research Services subsidiary, extended its contract and increased the scope of its engagement with BMS, its largest customer. Syngene also expanded its ongoing research collaboration with Amgen and signed a multi-year agreement with GSK.
  • Biocon was ranked among global top 10 biotech employers as per the 2017 rankings released by Science Career magazine. They are the only Asian company to feature in this list.

Business segments

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Small Molecules

  • Small Molecules revenues were Rs.1508 crores, which is down 8% from the previous year. The segment clocked revenues of Rs.426 crores for Q4FY18, which is up 8% YoY
  • This segment faced headwinds as a result of pricing pressure and channel consolidation by our clients in the US, which impacted our static sales. Continued demand for immuno-suppressants helped offset some of the pressure in this segment.
  • Despite the pressures, Viocon were able to increase market share for some of their specialty APIs in key markets.
  • Biocon also made regulatory submissions for multiple APIs across developed and key emerging markets. This will help this segment while moving into FY19.


  • Biologics revenues grew 10% to Rs.770 crores in FY18
  • Biologic segment revenues grew 47% in Q4FY18 and 10% for the full year.
  • The full year growth was impacted by shut down of fill-finish plant for modifications and requalification post regulatory audits last calendar year and lower licensing income pertaining to this segment.
  • Adjusting for impact of decrease in licensing income, product revenues growth was strong at 68% in Q4 and a decent 29% on a full year basis.
  • The growth was led by insulin sales in Malaysia via the offtake agreement, higher sales in Mexico where their partner won a government tender and traction in the AFMET region contributed to the insulin growth.
  • Antibodies product revenues increased as a result of the expansion of their geographical footprint in emerging markets.

Branded Formulations

  •  Branded Formulations grew 14% to Rs.149 crores in Q4. and 11% to Rs.612 crores in FY18
  •  In FY18, the growth in Branded Formulations, which comprises India and UAE, were led by strong growth in the UAE business at 33%, while growth of the Indian business remain muted at 4%, with performance impacted due to various challenges faced by the business.
  • The UAE business reported an overall strong revenue growth driven by their metabolics portfolio, which comprises novel in-licensed products like Jalra and Imprida and their own brand of biosimilar Insulin Glargine, Glaricon™.
  • In India, Biocon launched Krabeva®, a biosimilar Bevacizumab, our second oncology biosimilar launch in India. Developed for the treatment of metastatic colorectal cancer and other types of lung, kidney, cervical, ovarian, and brain cancers, it is an important addition to our current oncology portfolio in India.
  • Biocon hadto take price reductions in some of their products, both mandatory as well as market-based. Furthermore, there was a temporary volume shortfall for certain biologic products due to the shutdown of their biologics facility in Q2 and Q3 of FY18.


  • Syngene registered revenues of Rs.1423 crores, reflecting a strong growth of 19% compared to the previous fiscal.    Syngene reported revenues of Rs.409 crores, up a solid 45% compared to Q4 of last fiscal.   Syngene reported revenues of Rs.409 crores, up a solid 45% compared to Q4 of last fiscal.
  • Syngene’s revenues recorded a strong growth this year on the back of an overall strong performance across its businesses. While discovery services and development manufacturing services showed strong momentum, dedicated centers continue to be on a strong footing.
  • Revenue growth in Q4 was a robust 45%, signaling a full recovery from the impact of the fire incident that happened in December 2016. The damaged facility is expected to be fully operational during the first quarter of FY19.

Product Development Updates

  • The review of Biologics License Application (BLA) for biosimilar Pegfilgrastim by USFDA is progressing. The target action date for a decision by USFDA is June 4th, 2018.
  • In Europe, the regulatory review of Marketing Authorization Application (MAA) for biosimilar Trastuzumab and biosimilar Pegfilgrastim are also progressing and decisions by CHMP is expected by the end of this calendar year.
  • In the US, Mylan and Biocon’s application for Insulin Glargine under the NDA pathway is under review by the FDA.
  • The global Phase III trial of biosimilar Bevacizumab continues. For Insulin Aspart, Biocon has recently completed global Phase I study and expect a PK/PD readout shortly.

Revenue from licensing

  • A lot of Biocon’s licensing income has been related to local partnering of their biosimilar assets and clearly looking at the biosimilar asset opportunities, their focus to date had been largely on Trastuzumab. 
  • Biocon still have opportunities with the other biosimilar programs to do partnering which are in late stage of development.

Interest costs & expenses

  • The majority of the interest cost is on their debt in Malaysia, a debt of almost $180 million and the interest costs on that net of the subsidies which they receive from the Government of Malaysia is in the P&L.
  • Apart from that, Biocon have smaller debt facilities for other plants, and again bulk of that is in the P&L, and a very small component is capitalized along with the plant cost.
  • At some point in time Biocon are open to divesting a small stake in Syngene to raise additional funds if management prefer not to taking on too much debt on balance sheet.

Capitalized expenses

  • Although the filing for Trastuzumab and Glargine is over, it does not necessarily mean that the expenses are over. 
  • Biocon still have some expenses coming for these two molecules. The bulk of the capitalization is now for Bevacizumab which is in global Phase III.
  • As per Biocon’s capitalization policy, they only capitalize molecules where they have got an approval for that particular molecule in one of the markets, thereby establishing scientific proof of concept and also the technical and the commercial feasibility.
  • For Toujeo and Perjeta, all the initial expenses, till the time of first approval will be in the P&L.


  • Last year, the cash outflow at the Biocon level, excluding Syngene was around 400 crores. A small component of that was for the new antibiotics facility. 
  • Capex for FY19 & 20 should be anywhere around Rs.500-600 crores per year.
  • Majority of this is coming from our new antibodies facility, construction for which had started last year.
  • Mylan will also be contributing on that facility, so the numbers would get reduced. But the combined capex for next two years, at a Biocon level excluding Syngene, is expected to be around Rs.1000 crores.

Future Outlook

  • Biocon expects the absolute numbers to go up next year and spends to be in a similar range of 15-16% of revenue. On an absolute basis, Biocon expect gross R&D spend to be in the range of Rs.450-500 crores.
  • The two new drugs that have been added to the pipeline with Mylan and molecules with Sandoz are in early stages of development. Greater spends from them will come when these molecules move into the clinic.
    The increase in R&D expenses next year will be on account of our novel molecules pipeline and ANDAs.

Gross Margin pressure

  • If comparing with last year, there was a reduction of 4% and that’s mainly on account of Small Molecule pricing pressure. But if comparing it with the third quarter, then both the quarters had gross margin of ~55% which is in line with the trends seen in this year.

IP issues

  • From Trastuzumab perspective Mylan and Roche are reaching to a global settlement. 
  • As far as Pegfilgrastim in the US is concerned, there is an on-going IP process as part of the BPCIA Act.

Branded India business slowdown

Main reasons:

  • Shortfall of biologics because of the upgradation and requalification of the plant
  • Biocon also had the impact of GST and had some unfavorable pricing which they had to take to face competition.

Secondary reason: 

  • Biocon had some operational issues leading from attrition which impacted execution. So the next year, Biocon will not have these shortage issues and the impact of GST is behind.
  • In order to tackle pricing issues, Biocon have installed a key account team, which focuses on business and on key accounts and therefore to be able to guard the business more closely.

Biologics vs Generics

  • The cost involved in bringing a generic molecule to the market is significantly lower; generally it is between 5 to 10 million dollars. Whereas it takes upwards of 100 million dollars to bring a biosimilar to the market.
  • It takes almost 3 to 5 years minimum to bring a biosimilar drug to the market compared to a generic molecule.
    Taking into account all these dynamics, it is very expensive and very long drawn out in terms of the regulatory time line to bring a biosimilar product to the market.So biosimilars have low competition and high prices.
  • The FDA and the EMA organization are learning along with the industry on how to approve these biosimilars with collaboration of Biocon and other frontrunners in the industry.

Info on biosimilars

  • Pegfilgrastim

    • Biocon has had both resubmissions last year and there are typically changes in rapporteurs that are handling it and so there is some level of fresh look at it, but clearly Biocon benefit from the review that is already completed. So it is not essentially de novo.
    • On the FDA side, there is nothing new to report there. Biocon have their action date coming up in June and they are comfortable where they stand in the review process.
    • Pegfilgrastim will be launched in the second half. However management cannot comment on the Trastuzumab launch date because that is governed by the IP settlement.
  • IN105
    • The program right now is in Phase III, and Biocon have initiated the studies. A few patients have been dosed and the dosing will continue for the next couple of years. 
    • Biocon will look at the data on an interim basis sometime next year. It is all in discussion with the DCGI office. Biocon is very enthusiastic about this program.
  • Adalimumab
    • Biocon and FKB will participate in whatever costs and profits Mylan has as part of its deal.
    • They participate in their share of that as per global arrangement. So to that extent it would be a three-way.
    • However, Biocon’s own product has completed phase III clinical in the first half of 2017. There is time to take a decision on which option to pursue in the US and in other markets. So the management have not ruled in or ruled out any option outside of Europe at this stage.

Malaysian Operations

  •  In FY18, Malaysia reported an operational loss of $5 million at a standalone level, when excluding the impact of R&D. In FY19, the fixed expenses are projected to increase to $50 million on account of increase in operating expenses.
  •  Biocon’s Malaysia insulin facility is making good progress and receiving approvals for both the facility and the products from various regulatory agencies globally which will help them aim for operational breakeven in Malaysia after excluding R&D expenses in FY19.
  • At an operational level the P&L would have a delta of 7 million dollars. However due to various moving parts, one cannot necessarily correlate the delta with the top line growth with accuracy.

ANDA filings

  • Biocon have filed 2 ANDAs in FY18 and our plan is to file more in FY19.
  • R&D ramp up on small molecules is also likely to be seen going forward, largely because of management’s focus on submitting some of these ANDAs which are not just regular, but difficult to make products.

Bangalore Plant

  • The construction for this new facility started last year. It will take about two years to commission the facility, a year after that to qualify and file for approvals, and then one year to get the approvals.
  • So by next year, the facility itself should be commissioned and in 2020 Biocon will do the development work to file in various markets. Finally, in early 2021 commercial sales are expected to start from that facility.

Contribution of Biologics

  • With increasing performance of biosimilars portfolio in the market place, a better contribution from the Biologics is expected. The percentage contribution of the Biologics segment to the overall business pie is definitely going to trend upwards. 
  • Being a high value and a high margin business, margins should also improve once biosimilars become a significant part of the business.
  • Aspirational target of $1 billion dollar
  • Biocon is well on track for Biologics and Research Services.
  • However, Biocon are likely to face some challenges and headwinds in their Branded Formulations numbers and also in terms of their Small Molecules numbers.
  • Because of the kind of market dynamics that are prevailing in the world, there have been tremendous pricing pressures, price enforcement by NPPA etc.
  • There are a lot of challenges that Biocon had not anticipated, maybe five years ago which are proving to be a hindrance in achieving $1 billion revenue in FY2019.


Other Concall Summaries of Biocon

Advanced Enzyme Q2FY18 Concall Summary

Advance Enzymes.png

Financial Highlights

Advanced Enzyme Q2FY18 Financial Performance.png
  • AET had an uptick in the consolidated sales, up 9% to 986 million vs 904 million in Q2 FY’17.
  • Consolidated EBITDA for Q2 FY’18 stands at 414 million as against 487 million in Q2 FY ’17, down 15%.
  • The net profit in FY ’18was 387 million in the first half as compared to 569 million in the first half of FY’17.
  • EBITDA margin is about 40% in H1 FY’18 as against 52% in H1 FY ’17.
Advanced Enzyme Q2FY18 Revenue Breakup.png

Business and Operational Update

Advanced enzyme Q2FY18 Revenue Split.png
  •  AET also had the acquisition of Evoxx Technologies in the first half.
  • 10-15% growth rate is expected during the entire year.
  • Gross margins in Q2FY18 were only 75% compared to 1stQuarter of FY '18 gross margins of 80%.
  • The gross margin is up by 65% Y-o-Y, where other expenses are also up by 65% in 1st quarter and employee cost was up 24% in 1st quarter.
  • Average EBITDA margin last year was above 47-48% across the 4 quarters, whereas for this year the average EBITDA is around 40%.
  • In first-half there was negative 6% growth.
  • Evoxx has been a negative contribution to EBITDA of about 2 crores.
  • Excluding Evoxx, Revenue growth from geographical perspective for Q1 and Q2 have been 3%.
  • Overall EBITDA growth rate from Europe would be forecasted around 8% to 10%.
  • India Business of AET has grown and the Revenue coming from India will grow comparing Q2 FY17 to FY18
  • On Y-o-Y basis, the top client contribution remained similar, 27 crores.
  • The gross profit (Net sales minus raw material cost) is showing a year on year decline.
  • Decline in gross margin is due to mix effect instead of top customer. It is related to currency loss of 4.1%.
Advanced Enzyme Revenue Split H1FY18.png


  • Acquisition or setting up a subsidiary in palm in Malaysia to establish itself as a global player and to establish its office in the south-east Asian market.
  • 10% to 15% annual guidance in the next 2 quarters will increase margins.
  • The U.S. business has been driven by top-end customer.
  • Established technical support team in the Malaysian office, hiring 5-10 hard core technological people for the same.

Future Guidance

  • Approximate topline guidance for Q3FY18 quarter is 380 to 400.
  • Projected full year margin will be in the range of 40-45%.
  • Target achievement is difficult to predict, as the year sales target is 380 Crores to 400 crores FY18, but till now AET has covered only 172 Crores, so the remaining 210 crores has to be covered in the next 2 quarters. 


Granules Q2FY18 Concall Summary


Financial Highlights

Granules Q2FY18 Financial Performance.png
  • Topline grew moderately by 9% to 777 crores as compared to 714 crores in the same period of the previous financial year.
  • Revenue for the Q2 grew by 8% to 393 crores compared to Rs. 364 crores in the same quarter previous financial year
  • EBITDA recorded a growth of 7% to 84 crores.
  • Profit after tax for the quarter was at Rs. 40 crores.
  • Standalone sales during the Q2 of the year were 374 crores, an increase of 9% compared with previous financial year.
  • EBITDA and PAT increased by 11% and 6% to 82 crores and 32 crores compared to the last financial year.
  • Total debt as on 30th September was Rs. 816 crores. Out of this, long-term loans were Rs. 305 crores and working capital loans were Rs. 511 crores.
  • Annual tax rate is estimated to be 31% 
  • 5-year period CAGR estimate is at 27-28%. 

Contribution to Sales

  •  FD, PFI, API – FD, PFI and API contributed 42%, 24% and 35% of the sales respectively, as compared to 37%, 26% and 37%of the sales in Q2FY17.
  • Geographical breakup – regulated market of US, Canada and Europe put together contributed 66% of Revenue in Q2FY18, compared to 63% in the same period last year.
  • Molecules breakup –
    • • Paracetamol contributed 34% of the sales compared to 33% in Q2FY17.
    • • Metformin contributed 31% of the sales compared to 30% in Q2FY17.
    • • Ibuprofen contributed 14% of sale as against 13% in Q2FY17.
    • • Guaifenesin and Methocarbamol contributed 5% and 1% compared to 5% and 3% in Q2FY17.
Granules Q2FY18 Revenue breakup.png


  • Spent about 348 crores on CAPEX and in investments.
  • Majority of the CAPEX spent for increase in capacity of API and PFI in Bonthapally and Gagillapur and construction of oncology facility in Vizag.
  • Invested in the wholly-owned subsidiary in USA.
  • The recently concluded QIP and withdrawal from ECB helped to finance these funds.

Depreciation Impact

  • Started depreciating Metformin block and Module F, the PFI block. The hit has already started happening in Q2.
  • Depreciation of the investments in Paracetamol should starthitting from November and December.
  • The depreciation hit for the investment in Guaifenesinplanned in Bonthapally will happen somewhere in the month of March.
  • Oncology could happen either thisfinancial year or could slip into Q1FY19.

Dip in Margins

  • There is a marginal dip in the gross margin, primarily because the prices of some of key raw materials has increased compared to last year.
  • These raw materials are derivative from crude oil; as the oil price went up globally, cost of materialincreased.
  • Employment cost also has moved up because some of the projects are coming close to completion and getting ready for commercialization. Thus, there is enhanced headcount in operation side of it.
  • The increase in the material costs will be mainly passed on through to the customers.
  • Current EBIDTA margin is at 19%, lower than the usual 21-22%, owing to the under-utilized capacity.
  • The under utilized capacity will be optimally used by the year-end, resulting in EBIDA margin of 19-21% for FY18

Additional Stats

  • The market size for the Prasugrel tablet is over US $650 millions, as per the IMS market estimates.
  •  The total capitalized R&D for this quarter is 25 crores mostly in the GPI. Rs. 7 crores of the R&D expenditure have been written off.


  •  Last year, total of 4 ANDAs were filed.
  • A target of 10 ANDAs filings between Hyderabad and theUS facility is set.
  • Within this financial year itself, 4 products have been filed so far and remaining 6 products will be filed to reach a number of 10 ANDAs.
  • The USFDA approval for the Virginia plant is expected to happen in the current quarter itself.

Biocause and OmniChem

  • The Q2 Biocause revenue is around 67 crores and OmniChem at 35 crores.
  • The 50% share from Biocause is around 5 crores and OmniChem is nil.

Long-term Debt

  •  An increase of Rs.150 crores in long-term debt in the next 3-6 months can be expected.
  • Total long-term debt will be in the range of under Rs. 500 crores.
  • The total interest cost for long-term should be LIBOR plus 275 and short-term LIBOR plus 50-75.
  • Thus, on a Rs. 1000 crores debt, the interest payment would be around Rs. 40 crores.


Granules India Q3FY17 Concall Summary


 Key Financial Highlights

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  •  Revenues grew by 11%, Rs. 359 crores compared to Rs. 325 crores in the corresponding quarter of the FY16.
  • EBITDA of Rs. 81 crores and PAT of Rs. 39 crores
  • A growth of 21% and 34% respectively on year-on-year basis.
  • EBITDA margin improved by 189 basis points to 22.4%.
  • PAT margin improved by 188 basis points to 22.4%, compared to the third quarter of financial year FY16Total debt as on 31st December 2016 Rs. 681 crores.
  • Long-term loans Rs. 219 crores and working capital loans Rs. 462 crores.

 Apr to Dec FY17

  •  Revenues up by 7% to Rs. 1,073 crores from last year.
  • EBITDA was Rs. 230 crores, up by 15%.
  • PAT was Rs. 119 crores, up by 32% compared to last year.
  • Improvement in EBITDA margin by 157 basis points to 21.5% and PAT margin of 11.1% an increase of 214 basis points compared to the first nine months of FY16.
  • Rs. 230 crores spent on CAPEX and Investments in wholly owned subsidiaries during the first nine months of the current financial year.
  • EU exports account for 10% of the sales and are valued at Rs. 28-30 crores.
  • Metformin is growing at about 14-16%.

 Board changes

  • Dr. Prasada Raju is now an Executive Director in the board.
  • Rs. 230 crores spent on CAPEX and Investments in wholly owned subsidiaries during the first nine months of FY17.

USFDA Insection

  •  US FDA inspection completed.
  • Re-inspection from INFARMED expected to go smoothly.
  • Inspection of JV in Vizag from US FDA.
  • Expected delay is about a week after the re-inspection regarding the Portugal issue

 Contribution from API, PFIs and FDs in Q3 FY17

Granules Group Structure.png
  • API segment contributed 37%, PFI 29%, FDs 35%of revenues.
  • Auctus division contributed around Rs. 28 crores.
  • Approval for cetirizine expected in the next 6-9 months.
  • Till date 8 ANDA filings, of which 5 are approved and 3 are pending.
  • In 2 months, 4-5 more filings from Hyderabad facility and 2 from US facility are to be expected.

 Biocause JV

  • JV level sale was Rs. 49.7 crores.
  • EBITDA number was Rs. 7.4 crores.
  • PAT Rs. 4.7 crores.

 Spark Capital

  • Total R&D spending in the 9 months FY17 including capitalized amount, around Rs. 19 crores so far.
  • Most of the expenditure will be done in Q4. Another Rs. 2 crores to be spent on filings and R&D.
  • Capitalization of R&D expenditure will be Rs. 2.5 crores other than capital items.
  • Rx marketing instead of OTC private label business.


  • Revenue of Rs. 5.5 crores and PAT of Rs. 1.5 crores.
  • Expected to do close to Rs. 80 crores to Rs. 100 crores in the current quarter with at least a minimum of 20% EBITDA.
  • No data integrity or falsification issues.
  • JV has been inspected
  • The company expects the EIR may be in the next month or two


  • Sale of Rs. 2.1 crores for Abacavir and the multiple sclerosis drug
  • In terms of growth, the current value is around Rs. 3.4 billion.
  • Paracetamol can be sold straightaway.
  • Metformin needs to get approved in ANDAs.
  • Overall it is going to be about Rs. 300 crores to Rs. 400 crores on the full capacity utilization level.

 Capacity constraints on APIs

  • Biggest bottleneck is the API capacity.
  • No pricing pressure as of now or expected.
  • FD capacity is 18 billion tablets a year (calculated on a 500mg paracetamol tablet)
  • 50% to 60% capacity utilisation
  • Optimal capacity is 80% (keeping some spare capacity)
  • Empected time is 2 years for the costs to come down due to operating on the expected optimal capacity of 80%.
  • Already spent around Rs. 360 crores in the first 9 months, balance to be spent in the next 15 months.
  • Funding through warrants money coming from promoters and internal accruals
  • Around Rs. 53 crores from promoters towards warrants money is expected before first week of March.

 Fund raising

  • Debt might be raised through some institutions via loans, else equity can be raised if required
  • Debt equity ratio is not more than 1.5, comfortable based on cash flows and projections.
  • Based on the market conditions and future expansion requirements and other requirements, Board will decide and take a decision in the coming quarters, whether to go for equity or debt infusion.

 CAPEX in FY18

  • Greenfield API plant in Vizag is around Rs. 260-270 crores.
  • The new plant will be operational from Q2FY18.
  • An investment of US$ 30 million expected in US facility.
  • Balance will be used for expansion of APIs and PFIs in existing facilities.
  • Total CAPEX figure is Rs. 900 crores.
  • Post expansion, APIs will go up for 1-1.5 years, followed by a gradual increase in FDs.
  • Around Rs. 2 crores will be capitalized in the Q4.
  • Of the Rs. 230 crores, the Rs. 100 crores are from the US part
  • Yearly CAPEX and pre-operational expenses to be US $18-$20 million.
  • Capex amount will be depreciated over useful life of assets. Product development expenses will be amortized over estimated life of the product. Pre-operative expenses will be added to capex proportionately

 Promoter’s Holding

  • Promoter’s Holding will be 53% after conversion of warrants, by end of FY17.
  • 28% of Promoter’s Holding is pledged by end of FY17.
  • Pending warrants from the promoters is Rs. 53 crores, which will be paid before the first week of March.

 Current market state

  • Pre-operative current run rate will continue about US $1-$1.5 million per month.
  • In terms of IMS numbers the Metformin global market is clocking at around 41,000 metric tons.Based on the market research reports it is coming closer to around 60,000 metric tons per year.
  • Current capacity is at 3,000 TPA, 1000 TPA of which is outsourced.
  • At least two sites to be kept active for integrated business as a part of the site contingency option
  • Threat of new entrants is low due to API-to-FD integration, high capacity, and economies of scale, customer loy

New product filings

  • Glucophage has already been filed in FY17.
  • 2 more products - Glumetza and Fortamet – to be filed Q3-Q4FY18.

 US Pharma Windlas

  • Merger of Liberty and FTUG.
  • Parent company is FTUG – First Time US Generics.
  • Current share in it is 12.5%.

Future estimates

  • After the proposed CAPEX is complete the gross block will be Rs. 1,600 crores approximately.
  • Fixed assets turnover to be targeted at 2 times, not immediately as it will take time to stabilize operations and get approvals.
  • Initially API sales will be more, and then slowly it will be converted into finished dosages.
  • Around 20-25% will be the margins for finished dosages; between15% to 20% will be for PFIs, around 10% or so will be for API
  • ROE targeted at more than 20% for next 2-3 years, and 25% for the long run.
  • For growth, JV will be the first opportunity, followed by API and then the FDs based on the ANDA approvals. The forth opportunity will be the new API greenfield plants being built in Vizag for onco and sterile products.
  • For the first year the revenues of Rs. 200 crore and EBITDA of 20% is expected by only supplying to the Belgium partner.

Medium term estimates

  • The market size for the 4 licensed products is about US$ 4 billion.
  • Top line for FY19 roughly approximated to be Rs. 2000 crores.
  • Omnichem is set for expansion to touch Rs. 400 crores in FY19.


Biocon Q4FY17 Concall Summary


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               

Biocon Q4FY17 financial performance.png
  • 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

Biocon Q4FY17 Segmental Sales.png
  • 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:

Biosimilar pipeline of Bicon.png
  • 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.


Advanced Enzymes Q4FY17 Concall Summary

Advance Enzymes.png

Financial Highlights

Advanced Enzyme Q4FY17 Financial Performance.png
  • The company has doubled the dividend payout to 20% for coming financial year
  • The company has PAT of Rs 92.4 crores & sales of Rs 331 crores which is in line with expectation with barely 5-7% lower
  • The company says that there is nothing wrong in Q4 results. It is just the variability in the quarter as such.
  • The company says that it has got its client back which was in question. The clients business is resumed. It has grown single digit percentage in this year compared to last year there is stable outlook. 
  • The operating expenses have gone & one of the primary contributors would be the consolidation of the JC Biotech accounts. The company has started seeing some synergy especially on marketing side, but the cost synergies are yet to be realized. So in this financial year,  it expects that it will realize more synergies from that acquisition and the operating cost overall will come down
  • The company currently has debt of Rs 54 crores mainly for working capital
  • The company’s effective tax rate comes to 25-28% 
  • The company is continuing Rs 10 crores for the R&D as well as for the maintenance capex around 10-12 crores
  • The growth rate for top 10 customers are about 2-3% 

Revenue split

  • The company’s business can be broadly split into two geography, one is India & one is outside India.
  • International business is growing very rapidly
  • India business is stable & it is expected to register a healthy double-digit growth coming from both the areas especially from the internatinoal part of the business
  • The company is planning to get into three-digits within the next two, three years and within the three to five year horizon it is looking at good healthy three digit numbers from international busine
  • The exports of the company are around Rs 10 to 11 crores & it targets to close to Rs 100 crores by FY2020
Advanced Enzyme Q4FY17 Revenue Split.png

Single Client contribution

  • The company has one particular client which has contributed almost 650 million in first half of FY2017 & lowered at 146% kind of year on year.
  • The company has shifted its focus from single client.
  • It has more than 700 clients in its portfolio & growing day by day. Its focus is to increase revenue from some large clients.
  • Currently, it has this one client who may have multi-billion dollars clients going to speak to and it is in the process adding many more such clients. This client revenuebon a year-on-year basis has grown from Rs.73 Crores to Rs.79 Crores
  • Contribution for the first half of the year was 65 crores. Contribution of the client went up rapidly in the few years back and is stabilizing now
  • The company expects that top ten clients would be contributing about 35%. 
  • The existing client continues to grow at the same time it is adding new clients in existing segment & focusing on some new applications where it has strength. It is looking at alignment with production, it is looking at high value addition to clients & also looking at low areas where there is low competition
  • The company gives guidance of 15-20% with the current client mining. Also maintaining EBITDA margins of 45-50%
  • The company does not have any exposure to US Pharma industry, its primary business is nutraceuticals business. In india it does service the pharma industry.

Future Growth Areas

  • The company says that it has four, five applocation areas for growth
  • It is focusing mainly on nutraceuticals and several different areas some in nutritional area, animal nutrition, human nutrition and also some key selected bioprocessing opportunities that it is focusing on
  • On the industrial side it is looking at palm oil processing, oil & fat processing as it gets boards approval for setting up subsidiary in Malaysia. In the current financial year it is looking at some clients starting to materialize and will see full scheme revenues coming in FY2019.
  • There are also other application areas like animal feed, like detergents and biodiesel
  • The company board has approved to invest into a biodiesel company, so these are the several areas that it . 
  • Revenues from Biodiesel segment will come in FY2019
  • The company does not have visibility on detergent segment but expects contributed growth in animal feed segment due to geographical expansion.
  • The company sees larger opportunities in the nutraceutical market in US
  • The company expects some  increased revenues coming in from the various different areas in food processing and other market segments from South American markets or Amerfance
  • The company is investing a little in palm oil sector. It is setting up a marketing subsidiary or marketing office in Malaysia. It is a marketing & technical support

JC Biotech

  • The company is not using JC biotech as front end subsidiary. It is a production subsidiary. JC Biotech primarily contributing towards production and basically the revenue still coming from AET, so it is not a marketing subsidiary per se
  • JC biotech was only four months of consolidation in the last financial year. So in FY2018, it will see the full effect of the JC acquisition, both on the market side, revenue side as well as on the cost optimization and production side as well. 

Dependency on Distributors

  • The company is appointing distributors in various geographies
  • For various aspects like stocking or servicing as well as the technical service, it has distributors or authorized distributors and the focus is to meet each and every end client. The team travels on foot and lot of team members travel across the globe to meet the end customers, the end users and along with the distribution partner.

Goodwill policy

  •  The company has goodwill policy where it does impairment testing at each & every balance sheet date & if required there are conditions. This has to be done annually
  • The promoter of the company wants to increase shareholding from current 70% to 75%


  • The company says that it is on track with 25-30% CAGR for FY 2018
  • The company sees its revenue cross Rs 400 crores easily this year
  • The company expects to see its Asset Turnover Ratio to 1 positively in next 2-3 years
  • The company estimates long term vision on a topline basis of 15-20% over fairly long period of time