Why Biocon Share Price is Rising

Pharma sector stocks have been smashing records recently.

Out of the 20 stocks on the index, 10 hit their new 52-week highs recently. The Nifty Pharma index, hit a new all-time stratospheric high of 17,251 points.

The pharmaceutical industry has been experiencing remarkable growth in recent quarters on the back of better performance in the US generics market, robust results in the branded markets, lower costs of raw materials, and the acquisition of market share in newly launched products.

The sector is also back in the spotlight after India witnessed a notable rise in new Covid-19 cases.

Amid these developments, India's largest biopharmaceutical company, Biocon has rallied 13% in 5 days.

Here's why.

#1 Sandoz Collaboration

On 26 December 2023, the company's subsidiary signed a distribution agreement with Sandoz for an immunity-linked injection in Japan.

The distribution agreement with Sandoz, grants the company the exclusive rights to promote, sell and distribute Adalimumab BS for subcutaneous injection.

Based on this agreement, Viatris has completed marketing and promotion of the product as of 15 December 2023 but will continue to provide transition support until Sandoz gradually assumes responsibilities for the product starting 15 February 2024.

Biocon Biologics has acquired the global biosimilar portfolio of Viatris, including Adalimumab.

The transfer of the distribution rights of this product is part of this strategy and will bolster Sandoz's immunology and biosimilar portfolio.

Biocon Biologics launched Hulio, a biosimilar version of Abbvie's blockbuster drug Humira, in the US in July 2023.

Following the update, the shares of the company rallied.

#2 Viatris Biosimilar Integration

Biocon Biologics, on 18 December 2023, completed the transition of the acquired biosimilar business in approximately 120 countries across Advanced and Emerging Markets, achieving this milestone a year ahead of schedule.

In the final phase of integration, over 10 Emerging Markets, including Japan, Australia, and New Zealand, have transitioned as part of the biosimilar business acquisition from Viatris.

With the completion of this transition, Biocon Biologics has transformed into a fully integrated lab-to-market biosimilars company dedicated to serving millions of patients globally.

Earlier in 2023, the integration process included over 70 Emerging Markets in July, the North American business in September, and the European business in November.

This has further helped fuelling the rally in the stock.

#3 Upbeat Outlook for Generics

Biocon sees a huge potential in the generic business. For this, the company plans to introduce some new differentiated molecules as well as peptides by the end of the calendar year 2024 or early 2025, which will drive growth.

Biocon's generics business includes the active pharmaceutical ingredient (API) and the formulations businesses. While the formulations business continues to deliver high double-digit growth, the API business has been weak.

The generics business is roughly 20% of Biocon's total sales. The segment's revenue grew around 4% year-on-year (YoY) in the second quarter of financial year 2024 to around Rs 6.7 bn.

Over FY18-23, the generics business has seen 12% compounded annual growth rate (CAGR).

What Next?

Going forward, the company plan to expand their biosimilars portfolio with 5-10 new launches annually.

Biocon is actively investing in research and development, aiming to discover and develop novel drugs for unmet medical needs.

Further the company plans to strengthen its presence in established markets like the US and Europe through strategic partnerships and acquisitions.

The industry is poised for sustained growth in 2024 and is expected to reach US$ 65 billion (bn) owing to multiple growth drivers, such as rising affordability, increasing access, low cost of production, and others, along with government support.

To promote the pharma sector, the Indian government has announced many policy initiatives in 2023, including the Promotion of Research and Innovation in the Pharma MedTech sector (PRIP), an approach paper on National Pharma Policy displayed thrust on 'One Health' during the G20 Summit.

How Biocon Shares Have Performed Recently

In the past one year, shares of Biocon have gained 8.%. In the past five days Biocon is up 13%.

Biocon has a 52-week high of Rs 287.8 touched on 4 January 2024 and a 52-week low of Rs 191.6 touched on 21 March 2023.

It is currently trading at a PE (Price to Earnings) multiple of 17.6x, while PB (Price to Book) ratio stands at 3.1x.

About Biocon

Biocon is India's largest and fully integrated innovation-led biopharmaceutical company.

The company is engaged in the manufacture of biotechnology products and research services. It focuses on the research and development of therapies for the treatment of chronic conditions.

It offers a range of active pharmaceutical ingredients (APIs), branded formulations, complex biologics and biosimilars, including monoclonal antibodies (MAbs), RH-Insulin and insulin analogues.

Apart from this, the company also provides services, including contract manufacturing, drug licensing, research, and manufacturing of small and large molecules for biotechnology and pharmaceutical companies across the world.

For more details about the company, you can have a look at Biocon's factsheet and the quarterly result.

You can also compare Biocon with its peers.

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