Bangalore: Continuing its strong performance in the first quarter of 2009-10, Biocon Ltd on Thursday announced a three-fold increase in profit at Rs74 crore for the quarter ended 30 September, up from Rs25 crore in the same period last year.
The biotechnology firm’s revenue grew 31% to Rs580 crore from Rs442 crore in the corresponding period last year, on account of a product mix that yielded good margins. “Our earnings show that we are getting out of gestational mode and entering into growth mode,” said Kiran Mazumdar-Shaw, chairman and managing director of Biocon.
The quarter ended September also saw the opening up of a revenue stream, which the firm says will continue for the next four to five quarters. It received Rs10 crore in milestone payment from Mylan Pharmaceuticals Inc.
Looking ahead: Biocon managing director Kiran Mazumdar-Shaw. Hemant Mishra / Mint
“This looks little ahead of time as we had expected it to start trickling in from the next quarter,” said an analyst at an investment bank in Mumbai who didn’t want to be identified due to her company policy. Though the numbers are impressive, the firm’s margins are down sequentially. “We’ll have to see if Biocon can maintain its biopharmaceutical sales in the next few quarters.”
But Mazumdar-Shaw is optimistic that the growth, particularly in active pharmaceutical ingredients (API) and contract research, will continue. For its expanding API business, Biocon acquired a manufacturing facility of IDL Specialty Chemicals Ltd in Hyderabad in September. In contract research, where Biocon has an alliance with Bristol-Myers Squibb Co. (BMS), the firm expects to sign a few more deals. The market for contract research, according to a recent KPMG study, is expected to be $23 billion (Rs1.07 trillion) by 2011 with India accounting for 15%. Biocon has achieved 75% potential of the BMS contract; the remaining 25% will keep it going for the next few quarters but the firm needs to win more such contracts to utilize its capacity, said Bhavin Shah, research analyst at Dolat Capital Market Pvt. Ltd in Mumbai.
Committing Rs80-100 crore in research and development for this fiscal, it’s the proprietary molecules that Biocon is pinning its blockbuster hopes on. In September, it signed an exclusive co-development and marketing pact with California-based Amylin Pharmaceuticals Inc. for peptide therapeutics. Specifically, this is geared towards a peptide hybrid or “phybrid”, meant to combine the properties of two peptides into one small molecule to treat diabetes.
In its own research portfolio, two new molecules, for psoriasis and rheumatoid arthritis, have advanced in clinical trials. But it’s still the oral insulin entering the late stage trial in India that Biocon considers as a global opportunity. On Thursday, French drug maker Sanofi-Aventis SA announced that it has signed a global licensing agreement with US-based Wellstat Therapeutics Corp. on a novel oral first-in-class insulin sensitizer for the treatment of type II diabetes.
Insulin sensitizers are different from oral insulin, says Mazumdar-Shaw, who believes Biocon’s compound is the only such product in the advanced stages of development anywhere in the world. There are lot of safety challenges in compounds such as sensitizers and phybrid as they are unknown molecules, she says.
Medical practitioners agree. Sanofi’s drug is one of at least 20 insulin sensitizers in development across the world, says Anoop Misra, director and head, department of diabetes and metabolic diseases, Fortis Hospital in New Delhi. “While they may show good efficacy, the final test will remain cardiovascular safety.”