Biocon, India’s largest biotechnology firm in the private sector, said group profit in the third quarter of the current financial year plummeted 90 per cent. Profit dropped to Rs 28 crore in the three months ended December 2008, compared to Rs 291 crore in the corresponding quarter of the last financial year. The company set aside Rs 48 crore for mark-to-market losses on foreign exchange and said profit for the year ending March 31, 2009, is likely to be hit because of exchange losses.
Excluding the one-time asset sale in the corresponding period of the last year, profit in the current quarter would have dropped by 47 per cent. In the year ago period, Biocon sold its enzyme business for $115 million.
Sales of the company grew by 84 per cent to Rs 436 crore helped by an acquisition of a German company, which has a good distribution network for generic in the European Union. Biocon had acquired 71 per cent in Axicorp for Rs 173 crore in July 2008.
Commenting on the results, Kiran Mazumdar-Shaw, chairman & managing director, Biocon: “Biocon’s operational performance remains on a growth track. At a time when many sectors face a severe slowdown, we believe that Biocon has a unique opportunity to leverage our affordable R&D base and forge partnerships that will deliver large contract research, manufacturing and co-development opportunities over the next 5 years.”
Pharma sales grew by 93 per cent to Rs 375 crore while the research services (contract research and clinical research) grew by 43 per cent to Rs 66 crore. Operating profit has moved up by 51 per cent to Rs 80 crore.
Sharing the road ahead for Biocon, Ms Shaw noted that AxiCorp delivered modest profitability in line with expectation. “Currently, AxiCorp is a pure distribution business with relatively low margins. The strategic relevance of AxiCorp will crystallise when the Bio-similar Insulin opportunities open up in Europe. This, we anticipate, will happen in two years,” she said.
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The company in the near-term is expected to contribute good sales to Biocon as it has been recently selected as the AOK tender supplier for a key generic drug in Germany. The contract is planned to be awarded for the entire German territory over the next 2 years and is subject to review in accordance with German tender regulations. AOK is among the leading public health insurer covering about 40 per cent of the total insured population. The tender will strengthen the market presence of the growing Axicorp generic business.
The company detailing on its product development roadmap added that they are “making excellent progress on the research front with Oral Insulin IN 105 program, set to enter Phase III Clinical trials this quarter.” Biocon also claimed that it has completed a successful non-inferiority Phase III Clinical trial for Glargine, a basal Insulin analog. The trial data has been submitted to the DCGI for marketing approval.