Oral Insulin And Biocon Germany Reamain Mysteries

Driven by growth in the biopharmaceuticals segment, Biocon on Thursday posted a rise of about 25% of net profit to Rs100.75 crore for the quarter ended Dec. 31.

Commenting on the financial results, Kiran Mazumdar Shaw, chairman and CEO, said the performance reflects the growth marks an important step that will allow the company to invest in the promotion of research and expand partnerships for manufacturing and marketing. “The operating margin has also increased to 24% this quarter, reflecting the improved quality of earnings.”

Despite its ambitious oral valtrex cheap price insulin failing to live up to its hype, Biocon is confident of taking the project forward in the next few months.

Shaw said the company will identify a global partner in the next six months to finalise the oral insulin studies.

“We need to still conduct a number of studies for IN 105. It is a safe drug,” said Shaw in a conference call.

Last week, data released showed that in a trial in India involving 264 patients, IN 105 had failed to meet the primary goal of reducing HbA1c levels by 0.7%, which is the key objective for insulin.

According to Ranjit Kapadia, vice president, institutional research at HDFC Securities, it will be not very tough for Biocon to get a partner. “Though the results have been okay, and not that great, the oral insulin has a good future.”

Another worry for Biocon remains its German subsidiary AxiCorp, which it acquired in 2008 for 30 million euros.

AxiCorp accounts for about 30-35% of Biocon’s sales.

With the German government imposing a 16% rebate on all pharma companies present in Germany, there would be an impact on the margins and the topline, said Shaw.

Experts said though traditionally margins from AxiCorp have been to the tune of 15-18%, post the 16% rebate, margins could drop to 5-8%.

“Already Germany has a tender system. Now this rebate. So any firm which has a presence in Germany, and not just Biocon will get affected,” Suryadeep Das, analyst with Centrum Broking.

However, according to research analyst Bhavin Shah from Dolat Capital Market, as AxiCorp is a trading company which buys from low-cost places and sells in the EU, margins will usually not be higher than 10%.

Biocon’s alliance with US biggie Pfizer will start showing results only from FY2012, said Shaw.

Analysts say success of the $350 million Pfizer alliance, which was inked in 2010 and implies the US firm marketing biosimilars manufactured by Biocon in international markets, would depend on how soon the products can get approvals in different countries.

“Biosimilars require more time to seek the approval of generic drugs compared. So, to get approval is the key,” said Das.

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