The shares of biopharmaceutical company Biocon Ltd surged a day after the successful completion of its subsidiary Biocon Biologics’ $3.34 billion acquisition of the global biosimilars business of US-based healthcare firm Viatris Inc. The stock opened a gap-up at ₹284.2 and rose to an intra-day high of ₹286.95, before settling at ₹282.10 on the BSE. The Biocon Ltd share closed 0.30% up at ₹282.95.
The Kiran Mazumdar-Shaw-led company's acquisition deal comprises an upfront cash payment of $2 billion and the issuance of compulsorily convertible preference shares (CCPS) in Biocon Biologics worth $1 billion. It is equivalent to an equity stake of at least 12.9% on a fully diluted basis.
The company, in an exchange filing, said both Biocon Biologics and Viatris have obtained all applicable approvals from key global regulators, including the US Federal Trade Commission, the Competition Commission of India and the Reserve Bank of India, and its investors.
"Effective from the date of closing, Biocon Biologics will recognise the combined revenue and associated profits from the acquired products, a step up from the existing profit share arrangement," said Biocon.
To fund the deal, Biocon Biologics secured $1.2 billion of Sustainability Linked Loan (SLL) via an equity infusion of $650 million by Biocon Limited and $150 million by vaccine giant Serum Institute Life Sciences (SILS). Biocon Ltd’s funding comprises $230 million from existing reserves and $420 million through mezzanine financing. Biocon said it is also in the process of securing investments to retire the mezzanine financing, post-deal closure.
After the conclusion of the Viatris and Serum transactions, Biocon Ltd’s stake in Biocon Biologics will be 68%.
The company says the acquisition will place Biocon Biologics as a world-leading biosimilar player, with eight commercialised products. Now Biocon Biologics will have direct commercial capabilities and supporting infrastructure in the advanced markets and several emerging markets. "The integration of Viatris’ acquired global biosimilars business and Biocon Biologics’ existing capabilities in research and development, global scale manufacturing and commercialisation in several emerging markets positions Biocon Biologics as a unique, fully integrated, leading global biosimilars player."
Biocon Biologics will have full ownership of its collaboration assets -- bTrastuzumab, bPegfilgrastim, bBevacizumab, bGlargine, bAspart, bPertuzumab and bGlargine 300U. It'll also own Viatris’ rights for the in-licensed immunology products -- bAdalimumab and bEtanercept. Biocon Biologics has also acquired Viatris’ rights for bAflibercept, which is used to treat several ophthalmology conditions. Viatris has been the 'first to file' bAflibercept in the U.S.
Kiran Mazumdar-Shaw, the executive chairperson, Biocon Biologics, termed it a historic inflection point in Biocon's journey of becoming a world-leading, fully integrated biosimilars enterprise, which will fast-track its direct entry into several advanced and emerging markets.
Viatris has said it'll provide commercial and other transition services to Biocon Biologics for up to two years. Rajiv Malik, president of Viatris, has joined the board of directors of Biocon Biologics, effective November 29, 2022, while Kiran Mazumdar-Shaw will continue as the executive chairperson of Biocon Biologics Ltd.