Local investors were not impressed, and Biocon’s share price crashed by 11% on a day when the general market was up. But Mazumdar-Shaw described the acquisition as a “huge milestone for us”, “extremely transformational for Biocon” and “a big day for India”. Biocon Biologics, she said, is trying to create the world’s largest biosimilars portfolio, and the acquisition makes it “future-ready.”
The acquisition, she said, fills Biocon’s gaps in global supply chain, commercialisation, and regulatory matters. “It leapfrogs us into developed markets. We would otherwise have needed a lot of knowledge building,” she said. Of the $3. 3 billion, $2 billion will be paid in cash, $1 billion in equity, and another $335 million will be paid in 2024 for another biosimilar that Viatris will then have.
Asked about market worries on how Biocon would fund the deal, MazumdarShaw said the company has already received commitments of $800 million in equi- ty and $1,800 million in debt. An IPO is also planned in 18-24 months. The business, she said, will generate the cash needed to service the debt, and the payback on the acquisition would happen in 5 years.
Biocon Biologics, she noted, was valued at $4. 9 billion last year, when Serum Institute Life Sciences took a 15% stake in the company. With Viatris’s biosimilar business, the valuation is close to $8 billion, she said. Biocon Biologics has several other investors, including Tata Capital, PE firm True North, and Goldman Sachs.
“The biosimilar business is valued richly around the world. Biocon is now in that league,” Mazumdar-Shaw said. Biosimilars are biological drugs that are developed to be highly similar and clinically equivalent to an existing biological drug, and they can be developed once the original drug’s patent expires.