Biocon’s profitability to improve as structured equity exits ease interest burden: Kiran Mazumdar-Shaw

How are you using the QIP proceeds, and how does this fit into your capital structure optimisation plan? What’s the expected timeline for the remaining exits?

We’ve had a significant impact on our profitability due to structured equity investments in Biocon and Biocon Biologics, which carried interest provisions. We’ve already retired investments by Goldman Sachs, whose coupon payments are now off the books, positively impacting profitability starting Q2.

We’re now working on retiring instruments from Edelweiss and Kotak using the QIP funds. Once completed, this will strengthen our balance sheet and enhance profitability, both at Biocon Biologics and the consolidated level.

Revenues grew by 15 per cent this quarter. Could you clarify the underlying picture and what’s driving the actual profitability trend?

This quarter’s profitability appears lower because last year’s Q1 included a one-time gain of ₹1,242 crore from the sale of our branded formulations business to Eris Lifesciences. If you exclude that exceptional item, our profitability has actually improved – both at the PBT and PAT levels, led by strong performance from Biocon Biologics.

What weighed on your generics business this quarter?

The generics posted a negative profitability this quarter because of operating costs associated with newly-built API and drug product facilities. These investments were necessary for future pipeline expansion, particularly in GLP-1s. While this affected near-term margins, we expect long-term gains as we capitalise on the growth potential of these therapies.

The US has signalled the possibility of fresh pharma tariffs. How is Biocon positioned to mitigate this risk?

We are well prepared. Syngene has acquired a biologics facility in Bayview, Baltimore, and our generics operations are supported by a solid oral dosage plant in Cranbury, New Jersey. We also have a robust insulin partnership with Civica. While localisation is gaining ground in the US, our onshore presence helps us mitigate such risks. I wouldn’t want to speculate on tariffs, but we are proactively addressing the potential impact.

With increased competition in biosimilars, how do you plan to sustain pricing and margin pressures?

Biosimilars require scale and portfolio depth. We are among the top five biosimilar companies globally, with a broad pipeline and fully integrated capabilities. It’s not easy for new entrants to replicate this quickly. We don’t see immediate competition, at least for the foreseeable future.

What are Biocon’s major growth drivers going forward?

Biosimilars remain a core growth engine. Our focus on GLP-1s in generics is also strategic, we’ve made necessary investments upfront. Insulins continue to be a major global opportunity with several big players shifting focus away from them. We’re also optimistic about our cancer and immunology biosimilars portfolio, which is showing an encouraging traction. We are also the only company which has this combination of insulins and GLP-1s at a global scale, which makes us uniquely placed to do well in the long term.