Stock Pick From The Pharma Sector

HERE IS WHY

• ·         The major growth driver for the company is expected to be its biosimilar product portfolio
• ·         The imminent opening up of the biosimilar market in the US and high entry barriers places Biocon at the forefront
• ·         The research services would continue to remain a key growth driver for the company, with eight products in late      stage trials

Biocon is a well-established name in the field of biologics and is also the fourth largest insulin player in the world. In its journey, the company has been able to develop and market some breakthrough products in the domestic as well as emerging markets. It is also one of the largest end-to-end research service providers in India having key relationships with various global players such as Bristol Myers Squibb (BMS), Baxter and Abbott. But why does this company qualify as the choice scrip this time? Let’s check out.

First and foremost, the major growth driver for the company going forward is expected to be its biosimilar product portfolio. Currently, it is working on eight biosimilar products under exclusive arrangement with Mylan, besides the rhinsulin, which the company is expecting to file in the US and EU once the Malaysian facility comes on stream.

Apart from biosimilars, it is also working on its own set of novel products, which could open up out-licensing opportunities over a period of time, especially its ambitious oral insulin candidate - IN105. It can be said that with the imminent opening up of the biosimilar market in the US, around USD 71 bn market of biologics going off -patent and high entry barriers for new players, Biocon remains at the forefront to monetize the lucrative opportunity and support growth over the long run.

The company’s biosimilar business, which is basically exports of insulin, is likely to grow at a steady pace before taking off by FY17 post-regulatory approvals for the Malaysian facility. The growth in its statins business is likely to be muted owing to limited growth opportunity in a crowded market, while growThin the core biopharma business would continue to be driven by branded formulations and immunosupprasants/ insulins in the near term.

Going forward, a strong pipeline of biosimilar product launches supported by the exclusive tie-up with Mylan, coupled with the company’s initiatives to move up the value chain in the small molecules business by fi ling of ANDAs in the US gives us enough visibility of the company’s sustainable high growth path in the future.

Biocon offers end-to-end contract research services to its strong base of around 150 clients spread across various life science sectors through its subsidiaries - Syngene and Clinigene. The company has three multi-year contracts, with dedicated R&D facilities and scientists exclusively assigned to them, giving comfort on a steady revenue flow going forward. The research services would continue to remain a key growth driver for the company, with eight products in late stage trials. The contract research business provides enough visibility to sustain its historical growth rate of 20 per cent plus.