Biocon’s revenue in the quarter ended September rose 10 per cent to Rs 1,945 crore over the corresponding period in the previous financial year, primarily driven by its research services and biosimilars business segments, which reported a growth of 17 per cent and 10 per cent, respectively. The pharma major said that its subsidiary, Biocon Biologics, made strategic moves in the quarter which will drive future growth of the biosimilars segment and deliver long term value for shareholders. In an interview, Biocon Biologics deputy CEO Shreehas Tambe told Deepsekhar Choudhury about the road ahead for its biosimilars business and how its alliance with Serum is projected to pan out. Edited excerpts:
What will the impact be of the USFDA approval of Semglee as the first interchangeable biosimilar product on your US revenues in the coming quarters?
In July 2021, our biosimilar Insulin Glargine received a historic US approval as the first interchangeable biosimilar under the 351(k) regulatory pathway. Semglee, our biosimilar Glargine, was approved by the USFDA in July 2020 and commercialized in the US market by our partner Viatris last year. The interchangeable designation for Semglee will allow pharmacists to substitute it for its brand name reference product Lantus without the permission of the original prescribing physician, much like generic drugs. Semglee, with the interchangeability label, will now be commercialised by Viatris in the US by the end of this calendar year. Viatris is eligible for a 12-month exclusivity period from the date of commercial launch before the USFDA can approve another interchangeable biosimilar glargine.
We believe substitution at the pharmacy counter will help broaden access to this important diabetes medicine for patients. There are more than 30 million Americans living with diabetes in the US, who can benefit from our interchangeable biosimilar Glargine. Our biosimilar Glargine is poised for a strong growth in US on the back of the interchangeability designation.
What is the footprint of your insulin portfolio besides the recent US launch?
As a leading global insulins player, Biocon Biologics is benefiting people with diabetes in many emerging and developed markets through improved access to its more affordable recombinant human Insulin (rh-Insulin) and biosimilar Glargine. Our rapid acting insulin analog, biosimilar Aspart, received regulatory approvals in developed markets like EU and emerging markets like Malaysia in FY21. In Q2FY22, we received approval for Aspart in Canada.
We had commercialised our biosimilar Glargine (Semglee) through Viatris in the second quarter of FY21 in the US, and it is witnessing a gradual increase in market share in US In the EU, our biosimilar Glargine continues to benefit patients in over seven EU countries. In emerging markets too our insulins continue to perform well. In Q2FY22, we won a two-year tender for our biosimilar Glargine in Malaysia. We also launched our biosimilar Glargine in some new markets in the AFMET region during the quarter.
Biocon Biologics already supplies recombinant human insulin for the benefit of diabetic patients in many emerging markets. Till the end of FY21, Biocon Biologics had supplied Rs 2.75 billion doses of rh-Insulin globally since its launch in India in 2004. We are now developing the product for the US based on the 351(k) biosimilar regulatory pathway.
Interchangeability has cleared the regulatory hurdle. But what about its acceptance by other stakeholders?
The USFDA's grant of "interchangeable" designation to two biosimilars, first to our biosimilar Glargine (Semglee) and recently to Boehringer Ingelheim’s biosimilar Adalimumab (Cyltezo), within a space of a few months points to increasing acceptance as well as adoption of biosimilars in the future.
Interchangeable biosimilars have a significant potential to ensure cost savings for healthcare systems by enabling greater competition in the marketplace, as well as, potentially expanding access to affordable biosimilar versions of expensive innovator products.
The various US states have enacted their own laws on biosimilars interchangeability. Now, all 50 US states, the District of Columbia and Puerto Rico have legislation allowing biosimilar substitution at the pharmacy level.
The decision by a major Pharmacy Benefit Manager like Express Scripts to replace Lantus with our interchangeable biosimilar Glargine, Semglee, is an indication that key stakeholders in the US healthcare system are keen to leverage biosimilars as a critical tool in driving down the high cost of drugs, particularly expensive biologics for chronic conditions where they can serve as equivalents.
How will the inclusion of Semglee in Express Scripts' formulary help the biosimilar’s sales in the US?
Pharmacy benefit managers like Express Scripts manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. Express Scripts’ Formulary alone covers more than 28 million people in the US.
We believe adoption of biosimilars through PBMs like Express Scripts will drive down the high cost of biologics therapy for chronic diseases like diabetes. Our biosimilar Insulin Glargine has the potential to bring significant cost savings for patients, employers and PBMs. We expect the formulary coverage to begin in January 2022. We believe our biosimilar Glargine is poised for strong growth in the US on the back of the interchangeability designation and PBM’s formulary listing.
What is the rationale for having two versions of biosimilar Glargine being commercialised by Viatris?
Biocon Biologics co-developed Semglee with Viatris and together we are committed to improving patients’ access to sustainable, high-quality and affordable biosimilars. As part of this commitment, Viatris will soon commercialise two versions of our Insulin Glargine injection: Semglee (insulin glargine-yfgn) injection, a branded interchangeable product, and Insulin Glargine (insulin glargine-yfgn) injection, an authorised interchangeable biosimilar. Both products will be available in pen and vial presentations and are interchangeable for the reference brand, Lantus.
This dual product approach is intended to ensure that this historic interchangeable biosimilar Insulin Glargine can reach as many patients as possible regardless of financial circumstances, insurance or channel.
Can you elaborate on the R&D projects that you now wish to take up with Serum Institute of India? You have indicated it would cover mABs and vaccines on platforms like mRNA. When does revenue kick in?
The Serum Institute Life Sciences strategic alliance provides Biocon Biologics an asset-light and accelerated entry into the vaccines segment. The near-term focus will be on Covid-19 vaccines since a large part of the global population remains unvaccinated. Only three per cent of people in low-income countries have received at least one dose. There is also strong potential from the booster dose of Covid-19 vaccines. The alliance provides a committed revenue stream and related margins to Biocon Biologics starting in the second half of FY23.
Additionally, the partnership will have access to Serum Institute Life Sciences’ current development pipeline to address unmet needs in other communicable diseases like mosquito-borne infections. The platform enables Biocon Biologics to add next generation vaccines that will drive long-term growth.
Biocon Biologics delivered a strong quarter in terms of profitability. What led to the performance?
Biocon Biologics recorded revenues of Rs 743 Crore for Q2FY22, a year-on-year growth of 10 per cent, supported by continued market share gains in developed markets and strong growth in India and emerging markets.
EBITDA for the quarter was up 72 per cent year-on-year at Rs 303 Crore. This included revaluation gains made from the equity investment in Adagio at its IPO. Biocon Biologics had made an investment of $5 million in Adagio at its IPO. The appreciation of the scrip resulted in a Rs 50 crore gain in Q2FY22, which is reflected in our numbers. Even without this gain, we have reported strong operating margins this quarter primarily due to improved performance across developed and emerging markets and better cost management. This has led to the highest reported Core EBITDA of Rs 304 crore (excluding R&D, forex, licensing income and Adagio gain), reporting strong Core EBITDA margins at 42 per cent for the quarter. Profit Before Tax (before exceptional items) stood at Rs 174 crore.