Biocon Ltd Research ReportQ3FY21

Subdued Generics, higher costs impact financials… Q3 revenues grew 5.9% YoY to | 1851 crore. Generics sales de-grew 2.7% YoY to | 561 crore due to statin APIs portfolio witnessing a muted demand owing to stockpiling by customers in Q1FY21. Biosimilars grew 11.0% YoY to | 769 crore. Research Services segment grew 12.6% YoY at | 584 crore. EBITDA margins contracted 383 bps YoY to 21.6% mainly due to higher employee, R&D and other expenditure. EBITDA declined 10.1% YoY to | 400 crore as against I-direct estimate of | 481 crore. Net profit declined 16.9% YoY to | 169 crore. Well placed to capture global biosimilar opportunities The Biosimilars segment (35% of FY20 revenues) includes biosimilars and insulin. The company is heavily spending in this space. The progress has been encouraging with approvals and launches in the US, EU, Japan, Australia and Emerging Markets. Post Mylan Upjohn (Pfizer) merger, the scope has been extended to China as well. We expect this segment to grow at ~47% CAGR to | 7367 crore in FY20-23E mainly due to a strong US pipeline (Pegfilgrastim (launched), Trastuzumab (launched), Glargine (launched), Aspart (expected in FY22E) and Bevacizumab (delayed)) besides launches across the globe.