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Business News/ Companies / Licensing cost, wage hikes weigh on Biocon
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Licensing cost, wage hikes weigh on Biocon

Licensing cost, wage hikes weigh on Biocon

Tie-ups planned: Kiran Mazumdar-Shaw says Biocon is in discussion with potential partners for licensing its oral insulin product that is undergoing clinical trials. Gireesh GV/Mint. Premium

Tie-ups planned: Kiran Mazumdar-Shaw says Biocon is in discussion with potential partners for licensing its oral insulin product that is undergoing clinical trials. Gireesh GV/Mint.

Bangalore:Biocon Ltd, India’s largest biotechnology company, said second quarter profit dropped 4% from a year earlier because of development costs associated with its licensing agreements.

Net profit declined to 86 crore in the three months ended 30 September compared with 89 crore a year earlier, the Bangalore-based company said in a statement.

Tie-ups planned: Kiran Mazumdar-Shaw says Biocon is in discussion with potential partners for licensing its oral insulin product that is undergoing clinical trials. Gireesh GV/Mint.

Revenue for the quarter grew 23% to 524 crore.

Biocon has a licensing and co-marketing agreement with Pfizer Worldwide, where Pfizer will pay $350 million over a period of time, subject to Biocon achieving certain regulatory approvals for its products and other milestones.

Profitability was also impacted by higher costs. Manufacturing, staff and other expenses grew by 29% to 375 crore during the quarter.

Both energy costs and wages accounted for this increase, Biocon chairman and managing director Kiran Mazumdar-Shaw said.

The numbers posted were healthy, and the growth in Biocon’s branded formulations was particularly good, said Siddhanth Khandekar, an analyst with ICICI Direct.

Biocon’s stock fell 0.47 % to 346.85 on the Bombay Stock Exchange, outperforming the benchmark Sensex, which shed 0.87% to close at 16,936.89 points.

Chief operating officer Arun Chandavarkar said that while income through licensing over the next few years will have a fairly high degree of unpredictability, “partnering our research and development assets and entering into commercialization partnerships, both global and regional, continue to be an important aspect of our business strategy".

Mazumdar-Shaw said that wage increases and increased hiring added to salary costs. “We are looking to hire another 1,000 people before the end of this fiscal, taking the number close to 7,000," she said.

The company started selling Insupen, a reusable personal insulin injection for diabetics earlier this week. “This is a long-awaited device and we are hoping to catch a big upside with this product," Mazumdar-Shaw said.

Biocon was also in discussion with potential partners for licensing its oral insulin product that is undergoing clinical trials in India and hoped to finalise agreements this fiscal, she said.

On the cancer vaccine Biocon is developing, she said the company expects to start clinical trials by the end of the year to March 2013.

The company also plans to list its research unit Syngene, which does contractual research for third parties, next year.

“I have said before that we want at least six quarters of predictable growth before listing," said Shaw. Syngene grew about 20% this quarter from a year earlier.

sridhar.c@livemint.com

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Published: 20 Oct 2011, 11:57 PM IST
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