Biocon to sell enzymes unit to Danish firm

Biocon, a Bangalore-based biotech major, is planning to sell its enzymes business to Novozymes, a Denmark-based global enzymes company, for an undisclosed sum.

According to sources, the company is planning to hive off its enzymes business into a separate entity and then sell it to the Danish company.

This way, Biocon is planning to exit the enzymes business completely. The Bangalore-based company, however, did not respond to queries in this regard.

According to an investment banker, Biocon may be valued 1.5 to 2 times its enzymes revenues, which were around Rs 95 crore in 2006-07. This can work out to around Rs 150 crore.

The company is taking this hard decision as revenues from the enzymes business have been declining as a percentage of the total revenue for several years - from 20.9 per cent of the total sale in 2004 to 11.5 per cent in 2007. With the growing importance of statins and biopharma, enzymes have become a secondary business.

The focus shifted conclusively after the company invested over Rs 600 crore in building production facilities (Biocon Park) for bio-pharma products on a global scale.

According to the investment banker, "As enzymes sales are only around 10 per cent of Biocon's top line, it makes sense for it to exit as this is currently eating into its manpower and energy. The exit will enable the company to focus on biopharma and statins, which are a high-margin business. For Novozymes, which is an enzymes-focused company, it makes sense as the business gets bigger."

Biocon, since its inception 25 years ago, has developed a market for speciality and industrial enzymes and become a leader in India as the largest producer and supplier.

It has been supplying enzymes to over 50 countries across a wide range of industry segments such as healthcare, brewing, baking, alcohol, paper and pulp.

However, for the first time in 2006-07, Novozymes overtook Biocon in terms of the share of the Indian market.