Viatris deal-related expenses drag Biocon's Q3 net into Rs 42 cr loss

This, even as revenues rise 36% and Ebitda is up 35%

Bangalore based biotech firm Biocon has posted a 25 per cent year on year dip in net profit before exceptional items to Rs 140 crore for the third quarter of 2022-23 fiscal, while its Ebitda grew 35 per cent.

Net of tax and minority interest, the exceptional items amount to Rs 182 crore, resulting in a net loss of Rs 42 crore for Q3FY23. Its revenues, however, posted robust growth of 36 per cent to Rs 3,020 crore, and the Ebitda was up 35 per cent to Rs 723 crore. Net R&D expense for the quarter was up 144 per cent to Rs 337 crore further impacting the net profit.

The exceptional items during the quarter were primarily pertaining to deal-related expenses of the Viatris transaction. The Q3FY23 also includes a forex loss of Rs 44 crore versus a gain of Rs 19 crore in the corresponding quarter year before.

All the verticals posted double digit growth – generic formulations and API business grew 18 per cent to Rs 718 crore; while the biosimilars business grew 54 per cent to Rs 1507 crore and the research services (Syngene) revenues clocked a 23 per cent growth to Rs 786 crore. Biosimilars constitute around 50 per cent of the consolidated turnover.

“Q3FY23 has been an eventful quarter which saw the completion of the global acquisition of our partnered Biosimilars business from Viatris on November 29, 2022. We are now implementing country-wise integration of the business to maximise the value of the combined entity to propel growth. Biosimilars as a business segment offers differentiated growth to Biocon Biologics based on vertical integration and a unique portfolio of Insulins and antibody based immunotherapeutics,” said Kiran Mazumdar-Shaw, Executive Chairperson, Biocon and Biocon Biologics

She added that this quarter captures a fraction of the acquired business, but from Q4FY23 onwards, the financials will recognise the entire Biosimilars business.

“The advancement of our research pipeline led to Rs 337 crore Net R&D investments this quarter, which will drive Biocon’s future growth. We reported a strong EBITDA growth of 35% to Rs 723 crore, representing a healthy EBITDA margin of 24 per cent. Core Ebitda grew 49 per cent to Rs 1,069 crore.  As a part of our strategy to reduce the acquisition debt, Biocon has raised funds through a partial divestment of its stake in Syngene,” she said.

“We expect to end FY23 on a strong note with healthy growth across businesses. Biocon Biologics is tracking towards exiting the year at a $ 1 billion trajectory, excluding vaccines.”Shaw added.

The generics business saw an uptick in the sales of statins.

“The Generics business’ third-quarter results were in line with our expectations, delivering healthy sequential and year-on-year revenue growth… Margins, compared to the previous year, were muted by the product mix and continuing pricing pressure in the US market,” pointed out Siddharth Mittal, CEO & Managing Director, Biocon Limited.

As for the biologics business, it recorded its highest ever quarterly revenue of Rs 1,507 crore, on the back of the Viatris acquisition.

“This strong performance has translated to an EBITDA growth of 53 per cent to Rs 361 crore. This landmark acquisition marks an inflection point in our transformational journey and positions Biocon Biologics as a unique, fully integrated, leading global biosimilars enterprise,” noted  Shreehas Tambe, CEO & Managing Director, Biocon Biologics Ltd.

“We have drawn up a comprehensive plan to integrate the acquired Viatris business into Biocon Biologics and migration of business operations is scheduled in a phased manner to ensure business continuity and uninterrupted service to customers and patients,” he added.