Biocon Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Biocon Limited (BIOCON) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:23:49] Prakash Agarwal of Axis Capital asked about the mezzanine funding and when is it expected to reverse and the reason for funding delay. Siddharth Mittal CEO replied that BIOCON is in discussions with various private equity investors. Within the next few months, BIOCON expects to retire the short term debt to fund the payout immediately and also raising fund from private equity.

• [00:24:58] Prakash Agarwal of Axis Capital also enquired about an update on Beva and Aspart approval timelines. Shreehas Tambe Deputy CEO replied that at this stage there is no indication on the timeline, but BIOCON is engaging with them and see how it can be expedited.

• [00:28:25] Shyam Srinivasan with Goldman Sachs enquired about Biocon Biologics; Glargine market shares reaching on NRx about 14%, if BIOCON is on track for high teens market share. Shreehas Tambe Deputy CEO said it’s trending in the right direction towards the mid to high teens market share in the US.

• [00:30:31] Shyam Srinivasan with Goldman Sachs asked about some concerns about biosimilar pricing and BIOCON’s expectation on pricing. Shreehas Tambe Deputy CEO answered most customers are looking at stability of supply. BIOCON believes there is pricing sanity overall and believe that this is likely to be a reflection of the biosimilars marketplace in the near term.

• [00:32:58] Shyam Srinivasan with Goldman Sachs asked about API and formulation trends for the generics business. Siddharth Mittal CEO replied BIOCON should continue to see some growth coming in the API business as newer capacities are there both from brownfield and greenfield in the coming quarters. Overall, 2H23 is expected to have high single-digit growth vs. 2H22.

• [00:39:30] Neha Manpuria from Bank of America enquired how the emerging markets have been trending QonQ, if growth is seen in the ex-regulated market business on biosimilar. Shreehas Tambe Deputy CEO said the emerging markets have been doing well for BIOCON on all the three franchise.

• [00:43:45] Damayanti Kerai from HSBC asked about the split in terms of biosimilar sales between advance and emerging market. M.B. Chinappa CFO said it’s under 60% in advanced markets and just above 40% for Emerging Markets.

• [00:48:42] Harith Ahamed with Spark Capital asked about facilities related to the decline in tangible CWIP in the consolidated balance sheet by around INR1,300 crores. M.B. Chinappa CFO said it pertains to capitalization of one of the drug substance facilities that has gone online in the quarter of July to Sept.

• [00:50:17] Masira Vasanwala of FSSA Investment Managers asked if there is any collateral or cash flow against which mezzanine finance is secured.  Siddharth Mittal CEO replied that it would be secured debt against the underlying assets of Biocon Limited. So there will be no other collateral.

• [00:53:00] Sameer Baisiwala from Morgan Stanley asked about the market share outlook for Glargine. Shreehas Tambe Deputy CEO said that for 2023, for Glargine, BIOCON will retain the current customers that it has contracted with and will stay with those markets. BIOCON will trend towards the guided mid to high teens.

• [00:59:01] Dhruv Singhal asked about the potential timeline for IPO biologics and if a demerger of Syngene and Biologics is expected. Siddharth Mittal CEO answered that it’s a bit premature, but it won’t happen before the next 12 months or so.

• [01:04:13] Dinesh Mahajan asked about BIOCON’s market share in India of insulin glargine and if it coming under price control in India impact margins. Susheel Umesh CCO replied that glargine in India, is doing extremely well vs. last year, growing at more than 25% in a market that’s growing at about 3%.