BIOCON LTD.
Contd..
Biocon starts commercial operations under BMS pact
Biocon has commenced a fully dedicated research and development facility for Bristol-
Myers Squibb (BMS), one of the leading global innovator in Biocon Park, Bangalore.
This which was in line with Biocon’s collaborative research pact with BMS during March
2007. In fact, Syngene – the CRO arm of Biocon, entered into an R&D partnership with
Bristol Myers Squibb (BMS) for providing services for discovery and NCE development.
The initiation of the research and development activity will expand the span of the drug
discovery and development process. Syngene would facilitate contract research
services right from the initial stage of lead optimization to early stages of clinical studies
to Phase I and Phase II trials.
The 200,000 square-foot facility at Biocon Park is dedicated to helping advance Bristol-
Myers Squibb’s work in discovery and early drug development, and is currently occupied
by 270 researchers. The facility will house 360 researchers by the end of the year and
could accommodate as many as 450 employees in the future.
This initiative is to add incremental revenues of about Rs
800mn in FY10
With the commissioning of the new research facility and anticipated ramp up in
researchers count to about 360 (since most of the revenues for Biocon are on Full
Time Equivalent (FTE) basis), we estimate Biocon’s BMS pact would add incremental
revenue of Rs 800mn during FY10E. We expect the peak revenue potential from the
pact will be materialised during FY11E with 450 FTEs and revenue worth Rs 1200mn.
Initially the core research activity would earn revenue for Biocon but subsequently the
additional support activities and possible supply opportunities (like supply of sample
batches during the advance development of molecule) would further boost the earning
potential of the BMS pact FY11 onwards.
Certainly going ahead, the commercial commencement of long awaited BMS research
contract would emerge as a money spinner for Biocon, it also projects the research
capabilities of the company in Global pharma industry. Apart from this, Biocon has few
more medium-term revenue triggers that would maintain growth momentum. In fact,
the commencement of Tacrolimus and mycophenolate mofetil (patent expires in May
2009) API supply to US during Q1FY10 and launching of Glargine (a basal insulin
having market potential of Rs 400mn and only cometitor Sanofi-Aventis) in domestic
market Q1FY10 onwards would power the earnings growth of the company. Biocon
has already got the Drug Controller General of India (DGCI) approval for Glargine.
However, looking at the revenue triggers in the pipeline we maintain our positive stance
on Biocon ---- L.Kannan
