Biocon Q4 profit zooms to Rs 81 crore

BANGALORE: Biotechnology major Biocon’s net profit for the fourth quarter rose sharply after revenues increased and a forex loss of Rs 41.4 crore had depleted the year-ago figures. Biocon said it made a profit of Rs 80.6 crore in the January-March quarter, while sales jumped 40.9% to Rs 656.8 crore. The company board recommended a dividend of Rs 3.50 per equity share on Thursday.

Biocon, which has been exploring collaborations and potential investments in Malaysia, is keen to set up an insulin facility in this market, CMD Kiran Mazumdar Shaw said. The company has outlined a capital expenditure of around Rs 200-300 crore for this fiscal, of which Rs 70 crore is being invested towards consolidating its R&D activities in a new centre in Bommasandra, Bangalore. It will also be recruiting 750-1,000 in line with the expansion this year.

At the same time, its net profit in FY10 Q4 has taken into account a charge of Rs 10 crore, which includes losses put down in acquiring the 49% stake of its Cuban partner in Biocon Biopharmaceuticals, and Rs 7 crore, on account of its German subsidiary Axicorp’s acquisition of minority shareholder interest.

Biocon, which has outlined diabetes, cancer and auto-immune diseases as its core focus area, reported a 215% increase in net profit at Rs 293.3 crore on a consolidated basis for FY10. Its net sales closed at Rs 2,367.8 crore, up 47% against Rs 1608.7 in the year-ago period.

It reported EBITDA margins of 21%. However, excluding Axicorp’s contribution, Biocon’s EBITDA margin stood at 30%. Axicorp is largely a revenue contributor for Biocon at the moment, and it is expected to contribute significantly once it begins marketing biosimilar insulins.

“Axicorp’s margins have improved in 2009-10 largely because of the focus on cost effectiveness and better sourcing of generics, especially from India,” Ms Shaw added.

On a segmental basis, biopharmaceuticals business contributed 48% of its revenues, Axicorp accounted for 38% and research services contributed 11% in 2009-10.

“We are focused on moving up the value chain. So, any potential acquisition could be in companies that make finished products or even big brands,” Ms Shaw told reporters here. The company will jointly list contract research arm Syngene and clinical research arm Clinigene this fiscal and has roped in Abhijit S Barve as the COO of Clinigene.

The firm mopped up licencing income of Rs 12 crore in the fourth quarter, largely on the back of its partnership with drugmaker Mylan to manufacture generic biotech drugs (biosimilars) for emerging markets.

Emerging markets, excluding India, account for 40% of Biocon’s revenues and has become a strong focus area for the company.

The Bangalore-headquartered firm is entering the phase III pivotal proof-of-concept trials on early type-2I diabetics for its oral insulin product and is likely to conclude this towards the end of the year. This is in addition to other trials under IND filing with the USFDA later this year. It is also slated to start phase III clinical trials for psoriasis, rheumatoid arthritis and phase II/III trials for multiple sclerosis, Ms Shaw said.

Biocon had invested Rs 125 crore in R&D spends in 2009-10, a 45% jump over the previous year. These funds were invested towards conducting clinical trials and are expected to increase this year as the company advances in its biosimilar and novel programmes. Biocon’s stock closed at Rs 302.40 on BSE, up 2.93% on Thursday.