Biocon has struck a $200-million deal with Pfizer, which will see the US pharmaceutical multinational sell the Bangalore-headquartered biotechnology company’s insulin products globally. The insulin products developed by Biocon include four biosimilar products (copycat products of patented biotechnology drugs with different development processes): recombinant human insulin, glargine, aspart and lispro. However, Biocon will have co-exclusive rights to market these four products in India, Germany and Malaysia.
“As per the agreement, Biocon will receive $200 million (around Rs 900 crore) upfront from Pfizer along with additional development and regulatory milestone payments of up to $150 million (around Rs 675 crore),” said Biocon Chairman Kiran Mazumdar-Shaw in a late evening press conference from the US.
A senior Biocon official added that this inflow will not, however, reflect on the company’s balance sheet next quarter. “The reflection of the deal will take three years to be accounted on the balance sheet as this will come in tranches,” he said. Revenue from biosimilars would match the company’s present revenue of around Rs 1,200 crore from 2015 onwards. Shaw said that the company would also receive additional payments linked to Pfizer’s sales of these products.
Under the present deal, Biocon will clinically develop, manufacture and supply these biosimilars and assume responsibility for obtaining necessary approvals in various geographies. Pfizer will market these products in the designated geographies.
According to IMS, an independent market research firm, the combined global size of these drugs stood at $14 billion in 2009. While the market size of recombinant human insulin stood at $2.4 billion, it was $5 billion for glargene.
Similarly, the market size for aspart and lispro were $3.7 billion and $2.8 billion, respectively.
Talking about various stages of drug development, Shaw said, “While recombinant human insulin and glargene are ready for commercialisation, subject to regulatory approvals, aspart and lispro are in the early stages of development.”
She also said that the company would be able to develop these products well before the patent expiry in various western countries. Many of the biotechnologically developed drugs in the US and Europe will go off-patent from 2012 onwards, throwing up opportunities for firms like Biocon to market their biosimilars in these markets.
Talking about expected launches, David Simmons, president & general manager of the established products business unit of Pfizer said, “We will launch recombinant human insulin in emerging markets in the first phase and then introduce it in Europe in 2012 with the timeline for introduction in the US in 2015.”
The sequence of product launches will be glargene, aspart and lispro, respectively, after recombinant human insulin, he added. “The overall time frame will be 2012-2015 for these three products,” he detailed.
To supply the increased demand for drugs, Biocon will expand its facilities in India, along with its new facilities in Malaysia. “We plan to invest around $300 million to ramp up our manufacturing capacities, along with other product development work, in the next three years,” said Murali Krishnan, group chief financial officer of Biocon. Existing manufacturing capacity would suffice for these products for the next five years, he added.
Biocon shares closed 0.93 per cent higher at Rs 402.75 on the BSE today. The Pfizer deal was announced after markets closed.
