Biocon: Statins driving growth… - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Biocon: Statins driving growth…

May 24, 2004

India's largest biopharmaceuticals company, Biocon, declared its maiden quarterly and annual results. Since the comparative figures for 4QFY04 are not available, we will focus on the yearly comparison. Total sales of the company has increased by 94% to Rs 5.5 bn while the net profit has risen by 219% to Rs 1.4 bn. Operating profit margin stood at 34% compared to 29%, which is due to better economies of scale. The net profit margin stood at 28% due to lower interest outgo and higher operating margins.

Results at a glance...
(Rs m) FY03 FY04 Change
Net sales 2,539 5,019 97.7%
Fee income 278 387 39.2%
Other income 16 87 443.8%
Expenditure 2,092 3,697 76.7%
Operating profit (EBDITA) 725 1,709 135.7%
Operating profit margin (%) 28.6% 34.1%  
Interest 50 16 -68.0%
Depreciation 138 163 18.1%
Profit before tax 553 1,617 192.4%
Tax 118 231 95.8%
Profit after tax/(loss) 435 1,386 218.6%
Net profit margin (%) 17.1% 27.6%  
No. of shares (m) 100.0 100.0  
Diluted earnings per share (Rs)* 4.4 13.9  
P/E ratio (x)   38.5  

The major growth came from exports (up 150% and 63% of sales) on the back of strong performance by statins and immunosuppressants. Statins are the molecules used for the treatment of cardiovascular disease, which is one of the fastest growing therapeutic segment, both nationally and internationally. The company has gained significant market share in the US and European market as the supplier of off patent statins. Statins, in fact, contribute to 56% of the consolidated revenues of Biocon. The following chart shows the contribution of revenue by statins over last 4 years.

Its not only the statins that have shown phenomenal growth but also the other segments like anti-diabetics, neutraceuticals, gynecology and anti-osteoporosis have also shown robust growth. The table below gives a perspective on the company's growth in various segments.

Business segments...
(Rs m) FY03 FY04 Growth
BioPharmaceuticals 2,007 4,354 116.9%
Statins 1,199 3,028 152.5%
Immunosuppressants 35 137 291.4%
Others 773 1,189 53.8%
Enzymes 532 665 25.0%
Research services 277 387 39.7%
Custom research 266 385 44.7%
Clinical research 11 2 -81.8%
Total 2,816 5,406 92.0%

The company's plants are USFDA approved, which gives it a chance to expand its market in simvastatin, which will go off patent in the US market from the year 2006. The total size of simvastatin is estimated to be US$ 6 bn. More importantly, the company has signed an agreement with the Bristol Myers Squibb for the supply of recombinant human insulin, which is likely to be in the markets by the 2QFY05.

On domestic front, Biocon has launched 11 formulations in the cardio-diabetic therapeutic segment under its own brand name. The greater challenge lies in marketing of these products, on which one is likely to have some visibility by the end of 2QFY05.

The company is very well known for its focus on R&D activities. It spends about 5% of its revenue in R&D activities. Earlier, Biocon focussed on process development but now it is also working towards product development. It has filed 88 patent applications in the FY04. The two entities of the company, which are purely dedicated towards research (including custom research and clinical research), have shown a good performance in FY04. These subsidiaries also provide research services to the third party.

The stock is currently trading at a P/E of 38.5x FY04 earnings. Though valuations may seem expensive, considering the overall strengths from a long-term perspective, valuations are not high on a relative basis. The new contracts earned and the launch of new drugs in the Indian markets is likely to fuel growth. Also, the year 2006 will be crucial for the company when simvastatin will go off patent in the US markets.


Equitymaster requests your view! Post a comment on "Biocon: Statins driving growth…". Click here!

  

More Views on News

BIOCON Announces Quarterly Results (3QFY20); Net Profit Up 1.2% (Quarterly Result Update)

Jan 24, 2020 | Updated on Jan 24, 2020

For the quarter ended December 2019, BIOCON has posted a net profit of Rs 2 bn (up 1.2% YoY). Sales on the other hand came in at Rs 17 bn (up 13.5% YoY). Read on for a complete analysis of BIOCON 's quarterly results.

BIOCON Announces Quarterly Results (2QFY20); Net Profit Down 30.5% (Quarterly Result Update)

Nov 1, 2019 | Updated on Nov 1, 2019

For the quarter ended September 2019, BIOCON has posted a net profit of Rs 3 bn (down 30.5% YoY). Sales on the other hand came in at Rs 16 bn (up 19.0% YoY). Read on for a complete analysis of BIOCON 's quarterly results.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

BIOCON SHARE PRICE


Sep 18, 2020 (Close)

TRACK BIOCON

COMPARE BIOCON WITH

MARKET STATS