Biotechnology company Biocon plans to enter Latin American and other emerging markets for which regulatory approvals are likely to come through in the coming quarter.
The company posted a 13% drop in net profit at Rs 91 crore in the quarter ended December 2014 as against Rs 105 crore reported a year ago.
Total revenues also stood at Rs 779 crore during the quarter, an increase of 8% over the year-ago period.
Its pharmaceutical segment sales were at Rs 541 crore, while core biopharma sales, at Rs 436 crore, grew 4% year-on-year. Branded formulations grew 6% to Rs 105 crore while research services grew 20% to Rs 220 crore. The operating profit during the period under review fell 10% to Rs 170 crore.
Kiran Mazumdar-Shaw, CMD, Biocon, said during on third-quarter earnings call, "Our R&D spends have seen a sharp increase last quarter, where we have incurred a total spend of Rs 66 crore. We expect these spends to rise going forward as more biosimilar programs advance in the clinics. The decrease in Ebitda, therefore, needs to be viewed in context of this sharp increase in R&D expenses together with other factors, which include a modest forex loss, CSR spend, and some Malaysia-related expenses."
There was a net forex loss of Rs 5 crore last quarter on account of premium payments made towards hedging contracts and adverse movements with respect to the Malaysian ringgit-US dollar parity.
The company, which has earned Rs 10 crore from various licensing deals in emerging markets in December quarter, said while the quantum of growth from this business may differ in the future, it will continue to add to the company's topline. Mazumdar-Shaw said the bigger opportunities in licensing deals lie with itolizumab and oral insulins but none of them is going to happen this fiscal.
Biocon's biopharma business continues to be impacted by previously highlighted issues like credit risk in the Middle East, reduced offtake of specialty active pharmaceutical ingredient (API) and capacity constraints. The company is working towards shifting sales to other markets. The regulatory process for qualifying the products in newer geographies is on and it expect approvals to come through in the coming quarters.
"There is no lack of demand in the Middle East but there is a huge amount of credit risk for us. I think we are very cautious about making sales to that market because of higher risk. So we are kind of trying to ease off this bigger risk by trying to find newer markets with lower credit risk like those in emerging markets.
But to get into these markets, you have to go through regulatory approvals, so it cannot be just a quick switch. I think we are starting to see visibility in getting some of the regulatory approvals in some of the key markets in Latin America and in other region. We expect some good pick up starting this quarter," the Biocon chief said.
The company said two programmes – trastuzumab and glargine – are progressing well in global Phase III clinical trials, while two other biosimilar programs have entered the clinical stage globally. Recruitment of patients for the India clinical trial of biosimilar bevacizumab has commenced.
The company will also list its research services business arm Syngene by diluting 10-15% stake via offer for sale route. Its board has also given approval to hire merchant bankers.
It has inducted Jeremy M Levin, former CEO of Teva Pharmaceuticals, and Vijay Kuchroo, Harvard Medical School Professor and immunologist, as additional independent directors on its board.
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