Bangalore: India’s largest listed biotechnology firm Biocon Ltd said on Thursday it would divest its stake in German unit AxiCorp, after roughly meeting estimates with a 25-percent rise in the fourth-quarter net profit.
Biocon said the divestment decision was in line with its focus on global alliances that would include Germany and not need a separate unit for the region. Biocon and Pfizer agreed last year to a deal in which Pfizer would sell insulin drugs made by Biocon all around the world.
The company had said in January that revenue from AxiCorp would be pressured as it eliminated some low-margin drugs after the German government asked drugmakers to offer a rebate.
Shares in Biocon, which the market values at $1.7 billion, dropped as much as 2.4% after the announcement in the Mumbai market that was trading slightly lower.
“The numbers are in line with expectations but there are uncertainties about the strategy behind the divestment of AxiCorp stake,” said Bhavin Shah, a sector analyst with brokerage Dolat Capital in Mumbai.
Biocon said fourth-quarter net profit rose 25% to Rs 101 billion ($22.8 million) from Rs 806 million a year earlier, bolstered by strong sales in its biopharmaceuticals drugs including insulin.
The profit was roughly in line with analysts’ estimates of Rs 993 million, according to Thomson Reuters StarMine data.
Revenue in the fourth quarter rose 8% to Rs 720 crore. In 2008, Bangalore-based Biocon had agreed to buy 70 percent of German marketing firm AxiCorp for $43.7 million to boost its business in overseas markets. It provided no financial detail on the divestment.
The acquisition was expected to help Biocon in the marketing and distribution of a range of pharmaceuticals in Germany and other European countries.
On Thursday, Biocon said the AxiCorp divestment decision would have no impact on development of biosimilar insulin and analogs in collaboration with Pfizer.
“Axicorp intends to focus keenly on growing the present businesses and, during a transition period, will continue to provide services to Biocon related to the clinical development of Insulin and Glargine in Europe,” it said in a statement.
Biocon, which was set up in 1978 by its chairwoman and managing director Kiran Mazumdar-Shaw, is conducting final stage trials on its experimental oral insulin drug, IN-105, for which it has said it expects to find a global partner.