Corporate Development

Published: Jan 15, 2022
Updated: Jan 15, 2022

Strategic Alliance between Biocon Biologics and Serum Institute Life Sciences

With a team of 4800 people, Biocon Biologics (BBL), a material subsidiary of NSE-BSE listed Biocon Ltd aspires to transform healthcare through affordable innovative solutions as well as impact 5 million patients’ lives by FY22. BBL is uniquely positioned as a fully integrated ‘Pure Play’ biosimilars organization in the world. It has a platform of 28 biosimilar molecules addressing critical diseases. Five molecules from BBL’s portfolio have been taken from lab to market, of which three have been commercialized in developed markets like USA, EU, Australia, Canada and Japan.

The Board of Directors of BBL has very recently approved the scheme of merger by absorption, announced earlier in September, 2021 – whereby Covishield Technologies Pvt. Ltd. (CTPL), a wholly-owned subsidiary of Serum Institute Life Sciences Pvt. Ltd. (SILS) will merge with and into BBL. CTPL is engaged in the development of markets for vaccines and pharmaceutical products.

Under the terms of the agreement, BBL will offer approximately 15 per cent stake to SILS, at a post-money valuation of USD 4.9 billion, for which it will get committed access to a 100 million doses of vaccines per annum (including COVID-19 vaccines) for 15 years, primarily from SILS’s upcoming state-of-the-art vaccine manufacturing facility in Pune with commercialization rights of the SILS vaccine portfolio for global markets. There is no cash consideration involved. Infact, this merger shall allow BBL to enter the vaccine space, thereby creating potential value for the company’s shareholders.

Pursuant to this development, BBL will generate a committed revenue stream and related margins, commencing H2, FY23. Vaccines are a complimentary business fit to BBL and provides a new dimension to its efforts in improving global healthcare. Recently, BBL has announced a manufacturing and commercialization partnership in select emerging markets with Boston based Adagio Therapeutics Inc, for ADG20, a novel COVID-19 antibody therapy. These Kiran Mazumdar-Shaw, Chairperson Biocon Ltd and BBL January 15, 2022 Corporate India collolaborations support BBL’s intent of straddling on both infectious and non-communicable diseases in its quest to impact global health.

Interestingly, in addition to vaccines, the strategic alliance will also develop antibodies targeting several infections diseases like Dengue, HIV etc. The two companies will also enter Service Level Agreemnts (SLAs) for manufacturing and distribution of the vaccines and antibodies.

BBL will also establish, at its cost, a vaccine R&D division to support the strategic alliance in developing both vaccines and biologics for communicable diseases. Additionally, BBL has also committed that wherever possible, it will make available its cell culture and sterile fill and finish capacities for vaccine production under the strategic alliance.

Expressing her pleasure, Kiran Mazumdar-Shaw, the Chairperson of Biocon Ltd and Biocon Biologics said “This alliance will complement the strengths and resources of the two leading players in vaccines and biologics. Our shared vision of building large scale businesses having global impacts makes it a unique and synergistic value creation opportunity.”

Commenting on this development Ms. Kiran said “ADQ’s investment is an endorsement of the value that BBL’s business has built as a fully integrated pureplay biosimilars company and will enable us to expand our capabilities further.”

BBL had raised over USD 255 million from global marquee investors between January to November 2020. The company has raised USD 75 million through a primary equity infusion by True North Fund for a 2.44 % stake; USD 30 million from Tata Capital Growth Fund for a 0.85% stake. Goldman Sachs made a capital injection of USD 150 million in exchange for optionally convertible debentures.

On consolidated basis, BBL has reported a total income of Rs. 2803.60 crore and profit after tax of Rs. 267.50 crore in the FY21. Its equity capital has gone up from Rs. 206 crore in FY20 to Rs. 1058.80 crore in FY21 due to bonus issue and fresh equity infusions whereas the networth remains at Rs. 3184.89 crore.