Kiran Mazumdar-Shaw said the combined entity would position Biocon among the few global players with scale in both generics and biologics
NEW DELHI: Biocon will fully integrate its biosimilars arm, Biocon Biologics into the parent, in a deal valuing the unit at $5.5 billion.The move is aimed at creating a unified biopharma powerhouse, and to strengthen its global position to lead in diabetes, oncology, and immunology — therapeutic areas that together account for nearly 40% of global pharma revenues, Kiran Mazumdar-Shaw, executive chairperson, Biocon said on Saturday.Biocon will acquire the remaining stake in Biocon Biologics from Serum Institute Life Sciences (Serum), Tata Capital and Activ Pine through a share swap of 70.28 Biocon shares for every 100 Biocon Biologics shares, at a price of Rs 405.78 per Biocon share.Further, Biocon will acquire the residual stake held by Mylan (Viatris) for $815 million, split between $400 million in cash and $415 million through a share swap of 61.7 Biocon shares for every 100 Biocon Biologics shares at a price of Rs 405.78 per Biocon share.“The combined entity will offer a unique portfolio spanning biosimilars, insulins, GLP-1 peptides and complex generics, positioning Biocon among the few global players with scale in both generics and biologics. Further, we will combine the synergies in oncology and immunology with the products, in biosimilars and generics,” said Mazumdar-Shaw.As the only company operating globally with both biosimilar insulins and generic versions of complex peptides, including GLP-1s, Biocon is poised to address the rapidly expanding ‘diabesity’ market, according to a company statement. The company’s board also approved raising additional capital, of up to Rs 4,500 crore ($500 million) through Qualified Institutional Placement (QIP), subject to shareholder approval. The proceeds of the QIP will be largely utilised towards the cash component payable to Viatris.After the transaction and planned fundraise, the promoters’ stake in Biocon is expected to drop to around 44.4%.Biocon Biologics chief executive Shreehas Tambe will become CEO and managing director of the combined entity post-integration, and Kedar Upadhye will be the chief financial officer. Biocon CEO Siddharth Mittal will transition to a group leadership role, the statement added. The swap ratios have been approved by the board based on independent valuations by EY.Explaining the move, Mazumdar-Shaw said, “We had created Biocon Biologics as a separate entity to attract investments and for a strategic global focus on biosimilars. Over the years, we did that successfully, even acquiring Viatris’ biosimilars business for $3 billion. But markets kept devaluing both Biocon and Biocon Biologics because of debt overhang and holding company discount. Now the board feels it’s a better decision to stay together and consolidate, as it gives us a much stronger balance sheet.”
