Biocon Q2 profit drops 18% but revenue inches up on biosimilars boost

Biopharmaceuticals company Biocon Ltd reported an 18% drop in its consolidated net profit for the second quarter, as a slowdown in sales of generic drugs offset the growth in its biosimilars business.

Net profit after exceptional items for the July-September period fell to Rs 138 crore from Rs 169 crore a year earlier. However, net profit before exceptional items rose 11% to Rs 188 crore.

Earnings before interest, tax, depreciation and amortization (EBITDA) jumped 35% to Rs 551 crore while the core EBITDA margin expanded to 33% from 32% from a year earlier.

Kiran Mazumdar-Shaw, executive chairperson at Biocon, said the exceptional item related to modification of the optionally convertible debentures of a private equity investment in unit Biocon Biologics Ltd and reversal of claims related to the government’s Service Exports from India Scheme.

Biocon’s consolidated revenue from operations inched up 5% to Rs 1,840 crore from Rs 1,750 crore, primarily driven by good performance of the research services unit Syngene International and biosimilars business Biocon Biologics. The biosimilars portfolio includes insulins, monoclonal antibodies and recombinant proteins across developed and emerging markets.

Biocon Q2: Other highlights

1) Pre-tax profit before exceptional items rises 27% to Rs 276 crore.

2) Revenue from generic APIs and generic formulations falls 12% to Rs 530 crore.

3) Pre-tax profit from generics business drops 28.5% to Rs 498 crore from Rs 697 crore.

4) Syngene Q2 revenue at Rs 610 crore, up 17% year-on-year.

5) Biocon Biologics Q2 revenue rises 10% to Rs 743 crore

6) Biocon Biologics Q2 EBITDA at Rs 303 crore, up 72% YoY

7) Biocon Biologics Q2 EBITDA margin at 38% and core EBITDA margin at 42%.

Biocon management commentary

Mazumdar-Shaw said Biocon Biologics made strategic moves in the last quarter that will drive future growth of its biosimilars business and deliver long-term value for its shareholders. The quarter also marked Biocon Biologics’ strategic entry into vaccines and the infectious diseases segment through partnerships with Serum Institute Life Sciences and Adagio Therapeutics.

“With the waning pandemic and improvements in supply chain conditions, I believe all three business segments, generics, biosimilars and research services, are well positioned for sustained growth in H2FY22,” she added.

Biocon CEO and MD Siddharth Mittal, said the generics business witnessed a muted performance for the quarter as it encountered continuing pricing pressure in the US for its formulations portfolio, and a slower than expected ramp up of demand for some key APIs.

“Operational and supply challenges in the earlier part of the quarter also impacted the performance of the API business. There was advance buying by customers in the corresponding period of the previous fiscal, apprehending COVID-19 related disruptions and is reflected in the year-on-year decrease in revenue,” he added.