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Business News/ Companies / Biocon revenue up 16%, profit hit by loss of licensing income
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Biocon revenue up 16%, profit hit by loss of licensing income

Biocon revenue up 16%, profit hit by loss of licensing income

Biocon chairman Kiran Mazumdar-Shaw.Premium

Biocon chairman Kiran Mazumdar-Shaw.

Bangalore: India’s biggest biotechnology firm Biocon Ltd’s net profit declined 8% year-on-year in the 12 months ended March, hurt by the loss of licensing revenue and the divestment of its German subsidiary AxiCorp GmbH.

Biocon chairman Kiran Mazumdar-Shaw.

For the quarter ended March, the company’s net profit came in at Rs97.8 crore. That was far higher than the Rs79.6 crore expected by analysts, according to Thomson Reuters I/B/E/S. The company had posted a net profit of Rs100 crore in the year-ago quarter, but has since sold off its AxiCorp stake.

Fourth quarter net profit increased 15% sequentially. Revenue during the three months came in at Rs611 crore, an increase of 14% sequentially.

The Biocon stock rose 4% to Rs239.15 at the close of trading on BSE, on a day the benchmark Sensex closed flat at 17,134.25 points.

“They have shown good growth in many segments," said Siddhant Khandekar, a senior analyst with ICICI Direct. “The research services segment, for example, has grown 29%, while we were expecting a 20% growth range."

Chairman and managing director Kiran Mazumdar-Shaw said full year net profit had been impacted to the tune of Rs60 crore, with net licensing revenue dropping to Rs39 crore in fiscal 2012 (FY12) from Rs99 crore in the year prior.

K.N. Murali Krishnan, president, group finance, said licensing development fees from Biocon’s discontinued partnership with Pfizer Inc. and licensing income from other partners such as Mylan Inc. amounted to Rs152 crore in FY11, of which Rs99 crore was reflected in net profit.

In the year gone by, such income fell to Rs126 crore, of which only Rs39 crore was reflected in net profit. The figure for the year includes Rs46.3 crore of licensing development fees that came from Pfizer in the fourth quarter before the ending of the agreement, marking a jump over Rs29.2 crore in the third quarter.

Providing a break-up of the business, Mazumdar-Shaw said the company’s branded formulations business in India and contract research (through Syngene and Clinigene, the research subsidiaries) did particularly well. Revenue from branded formulations grew 39% for the year to Rs259 crore, while contract research expanded 29% to Rs410 crore.

“Our insulin and other products are doing well in India, and have hit number one or two in the rankings," she said.

The company’s main business of biopharmaceuticals grew 9% to Rs1,417 crore.

Biocon’s earnings before interest, tax, depreciation and amortization (Ebitda) margin stood at 27%.

After the ending of the commercialization agreement with Pfizer, the company now has the opportunity to take advantage of its multiple regional partnerships, Mazumdar-Shaw said.

As for research services, the investments the company has been making have been paying off, she said. “A few years ago, this business was severely challenged as it had become very commoditized," she noted.

Clinigene would now be made a subsidiary of Syngene, in preparation for the eventual listing of the latter, she said. The listing may be initiated in about a year’s time, she said.

Khandekar of ICICI Direct added that it remains to be seen how the company’s partnerships, both existing and new, evolve as the Pfizer dissolution has had an impact. “They have also been talking about the Syngene listing for sometime now, and again they are saying it will take a year," he said.

sridhar.c@livemint.com

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Published: 28 Apr 2012, 12:40 AM IST
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