Biocon is planning to list its biosimilar entity, Biocon Biologics, on the capital markets in the next few years. Although this move will allow the entity to expand on current projects, it also raises questions about whether it will be successful.
Bengaluru, India-based company Biocon plans to take its biosimilar unit, Biocon Biologics, public in the next few years, according to the company’s 2020 annual report; however, experts wonder whether the move will create more risks than rewards.
“We intend to list Biocon Biologics on the Indian capital markets in the next 2 to 3 years. However, it would be early to comment on specific IPO [initial public offering] timelines as it is dependent on business performance and market conditions,” the report said.
In addition, the report explained that it is too early for Biocon to give information on the potential size of the IPO but indicated that Biocon will keep shareholders informed once the company is ready to tap the Indian capital markets for funding.
Biocon Biologics has functioned as a separate unit under Biocon since March 2019. The subsidiary has its own dedicated infrastructure and is responsible for the development, manufacturing, and commercialization of all biosimilars.
During the fiscal year ending in 2020, Biocon Biologics received $75 million in private equity from Active Pine, an affiliate of True North Fund. The investment gave True North Fund a 2.44% minority stake. Biocon Biologics is valued at $3 billion, according to the company.
Drawbacks of Going Public
Joe Fuhr, PhD, professor emeritus of economics at Widener University in Chester, Pennsylvania, and an expert on antitrust health economics and pharmacoeconomics, told The Center for Biosimilars® that it’s very early to tell just how much of an impact this decision will have for Biocon and Biocon Biologics.
However, answering to outside shareholders could make conducting business more challenging.
“The biggest thing is that now, the people in charge will no longer really be in charge. They're going to have to answer to stockholders. They may want to do one thing and, if the stockholders don't feel that it’s going to be profitable, then they're not going to be able to do that. They’ll lose a lot of their independence in decision making,” Fuhr said.
What’s in Store for Mylan Partnership
Sarfaraz Niazi, PhD, an adjunct professor of biopharmaceutical sciences at the College of Pharmacy at the University of Illinois at Chicago, said that Biocon’s decision to list Biocon Biologics on the capital markets will allow the entity to produce more products with the resources it already has combined with the cash raised from the sale of shares in the company.
“By going public, they will be able to raise the money they need to expand their operations into other areas, mainly monoclonal antibodies….Basically, it's the expansion of portfolios. They have all the resources. They have everything in place today to manufacture the products,” Niazi said.
However, Niazi pointed out that this leaves the door open for Biocon to potentially break ties with Mylan down the road, as Biocon Biologics may not need additional financial support from Mylan if money generated from public investments suffices.
“But Mylan has developed a big-pharma mindset, which doesn't allow them to stay smart and [develop products] at a smaller cost. So, this will allow [Biocon] to break up with Mylan, for sure, and be on their own in developing biologics on a much bigger level,” Niazi said.
In addition to being an educator, Niazi is the founder of biosimilars companies Karyo Biologics and Adello Biologics. He also founded the biosimilar advisory company PharmSci.
In the report, Biocon projected its revenues for Biocon Biologics would reach $1 billion by the 2022 fiscal year. Revenues at Biocon Biologics rose 29% during the 2020 fiscal year to $260,000.
Mylan and Biocon produced several biosimilar candidates, with 28 biosimilar and insulin analog products in development or on the market. Most recently, their pegfilgrastim biosimilar, Fulphila, was launched in Canada and Australia in April 2020.
In December 2019, Biocon Biologics launched the biosimilar trastuzumab Ogivri on the US market. The company has also received FDA approval for its insulin glargine product (Semglee), which it plans to launch later this year. Biocon Biologics is also working to receive approval for its insulin aspart and bevacizumab biosimilars for the United States and the European Union.
“We believe that the demand for biosimilars…is rapidly increasing and will be a meaningful contributor in our growth journey,” the company said in its report. “We already have a presence in the majority of the top 20 markets, which should aid expansion…with further uptake, launch of new products, and entry into new markets.”