Biocon forecasts stronger second half of FY27 with multiple growth drivers despite Q2 profit decline

Biocon anticipates a robust second half of FY27, supported by several key product launches and increasing insulin sales. The company noted a 52% decline in consolidated net profit, attributed to delayed shipments affecting quarterly revenue. Ustekinumab and Aflibercept biosimilars are projected to boost sales in the US market significantly. Additionally, the launch of Pertuzumab in Europe and Brazil is expected to generate substantial revenue.

Mumbai: Biocon expects a stronger second half of FY27, driven by four growth engines, its Ustekinumab and Aflibercept biosimilars in the US, the upcoming launch of Pertuzumab in Europe and Brazil, and rising demand for insulin, Biocon CEO and Managing Director Shreehas Tambe said.

On Wednesday, the company reported a 52% year-on-year decline in consolidated net profit for the September quarter.

"We've always said the second half of the year is going to be stronger for us than the first half," he said.

Biocon reported consolidated revenue from operations of Rs 4,389 crore, up 2% year-on-year, while total income rose 1% to Rs 4,423 crore in Q2FY27.

EBITDA declined 7% to Rs 865 crore, with margins contracting to 20% from 22% a year earlier.

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Biopharma revenue, comprising biosimilars and generics, grew 5% to Rs 3,583 crore. Biosimilars revenue increased 3% to Rs 2,809 crore, while generics grew 10% to Rs 774 crore.

Explaining the margin decline, Tambe said around $20 million of biopharma revenue, equivalent to about 5% of quarterly revenue, could not be recognised in Q2 because shipments were delayed by geopolitical and logistics disruptions. While the associated costs were booked during the quarter, the shipments reached customers and were recognised as revenue in October.

"There's no underlying business challenge. These products have subsequently been sold in the month of October itself because they reach the customers after September. And those are account of shipment delays that have occurred because of the ongoing geopolitical issues that you're seeing," Tambe said.

"We have always said EBITDA margins will be in the region of mid-20s and that is what you will continue to see," he said, adding that there was no systemic issue with the business.

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On Pertuzumab, Tambe said the company had a contracted supply value of $400 million over 10 years under its Brazil partnership, with supplies expected to begin in the fourth quarter of FY27. He estimated the European market opportunity at $600-700 million, with Biocon expecting to launch in the same quarter.

"The $400 million over 10 years, there will be some ramp up, ramp down as you will expect in any product," he said.

In the US, Biocon' Ustekinumab biosimilar Yesintek has reached 34% market share, while Aflibercept biosimilar Yesafili is expected to ramp up in the second half. Its insulin franchise has grown from less than $100 million to more than $300 million, Tambe said.

Commenting on the US midterm election results and potential policy changes, Tambe said the focus on healthcare affordability remained bipartisan.

"The US policy overall has always been to see from different bipartisan consensus on reducing healthcare cost. The approaches may have been different on different sides of the aisle but we see the outcomes not impacting the affordability part, the focus remains on making healthcare more affordable for both sides."