On Friday, Biocon Ltd’s shares rose by 3.3% on news that its partner Mylan NV’s revised applications for two biosimilar products—trastuzumab and pegfilgrastim—has been accepted for review by the European Medicines Agency (EMA). This puts the EU programme back on track, which had got derailed after the applications were withdrawn in August due to quality compliance issues at Biocon’s plant.

The bigger news was waiting post-market on Friday, when the US Food and Drug Administration (FDA) said it has approved Mylan’s biosimilar product trastuzumab for launch. In mid-July, things were looking up as it appeared the firm would get approval for this product in September, but the decision date got pushed to 3 December. This and inspection-related setbacks led to investors fretting, particularly due to the experience of other companies who tripped up on regulatory inspections.

All decks are cleared for the US launch of trastuzumab, according to a Biocon spokesperson. But the launch button is in Mylan’s hands. While Mylan said it expects to be the first biosimilar in the market, after getting global licences from Genentech and Roche under a settlement, no launch date has been announced. A 1 December Reuters report cited a Barclays analyst saying a launch was not expected before 2019, but that this approval adds credibility to Mylan’s biosimilar effort.

While Biocon’s shareholders should temper their enthusiasm, as the launch is expected only in 2019, they too can take comfort from the boost to the company’s credibility as well. These credentials not only matter for valuations but also for when Biocon may negotiate partnerships for its other underdevelopment products.

Pegfilgrastim is the second product with Mylan which is queued up for approval in the US, but has got delayed as the regulator has asked for additional information. If this also comes through, it will be another big win for Biocon. Apart from these two, they have also filed for insulin glargine in Europe and US, and there are three more products being developed jointly under this partnership.

The next event investors will keep watch for is on the plant inspection front. Now that EMA has accepted the filing for the two products, an inspection will be due and Biocon has said it is ready for it. An all-clear on these fronts is essential to remove any doubts on the actual launch.

The money will begin to flow to Biocon in the form of a share of profits earned from major developed markets where Mylan has exclusive rights for the co-developed products. These are large products and the returns could be substantial but that also depends on competition from other biosimilars, at the time of launch. Trastuzumab had global revenues of $6.9 billion (Rs44,500crore) while pegfilgrastim’s revenues were $4.6 billion in CY2016 and a large share of this would lie in developed markets.

Biocon’s shares have gained in the past few months but even then the FDA approval means certainty of income from the trastuzumab launch, and improved odds for launches in the US and EU from its research pipeline. That’s why its shares rose by 15% on Monday, although a launch is expected only in 2019.

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