Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Biocon Ltd (BOM:532523, Financial) reported a strong year-on-year revenue growth of 30% for Q1 FY2025.
- EBITDA increased by 117% year-on-year, reflecting strong operational performance.
- The Biosimilars segment showed robust growth with an 11% increase in revenue from operations.
- The company achieved several key regulatory milestones, including FDA and EMA approvals.
- Strategic business transfer with Eris Lifesciences added INR1,057 crores to the total revenue.
Negative Points
- Generics business saw a 6% decline in revenue from operations year-on-year.
- Syngene's revenue from operations decreased marginally, with a 20% drop in EBITDA.
- The company faced price erosion and increased R&D investments, impacting margins.
- FDA inspections at two API facilities resulted in multiple procedural observations.
- Net profit, excluding the Eris transaction, was significantly lower at INR19 crores.
Q & A Highlights
Q: The first question I have is on the Biosimilars. I agree that we are increasing market share quarter-on-quarter in the existing products in the US. But should we assume the similar improvement happening on the value of these products? Basically, how is the pricing tracking in these Biosimilars so vis-a-vis the market share gains?
A: Thanks, Amey, for the question. The Biosimilars opportunity in all markets, including North America, Europe, and Emerging Markets, seems very strong. Pricing has been stable, particularly in the US oncology space, and we expect this stability to continue. Market share gains should correspond to revenue growth, although pricing will gradually decline over time.
Q: On Hulio, our expectation was that in FY25, the market landscape will move towards generic. Can you give some color on the market development here in the Humira biosimilar market?
A: The market is evolving in three stages: opening up in 2023, gaining traction in 2024, and fully opening up in 2025. Currently, biosimilars are starting to take market share, although the originator still holds a large part. We expect significant opportunities in the second half of FY25.
Q: With respect to the inspection at Bengaluru, while the response has been submitted, can you share the timeline for implementation of the measures?
A: We are in the process of responding to the agency with a comprehensive CAPA plan within the stipulated timelines. The agency typically reviews this within 60 to 90 days, but there is no defined timeframe for their response.
Q: On the Generic Liraglutide and considering the business prospects for Biocon Generics, what kind of scale-up can we expect in the second half of FY25?
A: We expect approval from European authorities later this fiscal year and launches in various markets. The GLP-1 franchise is a significant growth driver, and we are well-placed to capture this opportunity. While specific numbers are difficult to provide, we expect significant growth in the second half of the year.
Q: There seems to be a sharp decline in the BBL business on a quarter-over-quarter basis. Can you give us some color on how much of that decline is due to the India business divestment versus underlying business trends?
A: The decline is partly due to the divestment of the branded formulation business and the cyclical nature of tenders in emerging markets. However, on a comparable basis, there is strong growth in product performance and market share.
Q: Now that we have the US FDA approval for Aflibercept, what are the timelines for the appeals, and does this affect the timeline of the launch?
A: We are in litigation with the innovator in the US. While we cannot comment on the specifics, we are working to resolve this and aim to get the product to patients as soon as possible.
Q: What is the net debt position for BBL and the consolidated entity this quarter?
A: The net debt for BBL is about $1.2 billion, with some incremental efficiency this quarter. At the consolidated level, the net debt is about $1.1 billion plus.
Q: On Aflibercept, what is your competitive positioning in Europe, and when do you expect the benefits to start flowing in?
A: We are well-placed given our timing and market position. We expect to provide an option to patients sooner and more efficiently than has been available so far.
Q: On Adalimumab, can you share the volume share expectations for FY25 or FY26? Also, does the exit of a competitor affect the overall biosimilars opportunity in the US market?
A: We have not provided specific guidance on market shares. The exit of a competitor aligns with our expectation of market consolidation, and we believe Biocon Biologics is well-positioned to endure in this market.
Q: Are there any timelines to deleverage the balance sheet, and are you considering divesting any business elements?
A: Deleveraging is a priority, and we intend to take action this year. There are no plans to divest any business elements as we see strong opportunities in both the Biosimilars and Generics businesses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
