Biocon Ltd.’s unit has signed a pact with its partner Viatris Inc. to acquire its biosimilars business for up to $3.34 billion (about Rs 26,079 crore) in stock and cash.
Other Key Transaction Highlights
The transaction is expected to close in second half of 2022, subject to closing conditions.
The companies will also enter into a transition services agreement, pursuant to which Viatris will provide certain transition services, including commercialisation services, for an expected two-year period.
Viatris also will pay $50 million to Biocon Biologics to fund certain capital expenditures.
Viatris was formed in November 2020, through the combination of Mylan and Upjohn (a unit of Pfizer earlier). It has a global biosimilars franchise with 150 marketing authorisations in over 85 countries with focus on oncology, immunology, endocrinology, ophthalmology and dermatology.
The deal—value accretive to Biocon—enables it to create fully integrated biosimilars enterprise.
After the deal, Biocon Biologics will realise full revenue and associated profits from its partnered products, a step-up from its existing arrangement with Viatris.
Biocon Biologics will gain Viatris’ global biosimilars business whose revenue is estimated to be $1 billion next year, along with its portfolio of in-licensed biosimilar assets.
The deal will expand Biocon Biologics’ Ebitda base and strengthen overall financials, enabling investments for sustained long-term growth.
It’s likely to accelerate the global reach of Biocon in developed markets and improve its brand presence in the U.S., Europe, Canada, Japan, Australia and New Zealand.
By integrating Viatris’ portfolio, Biocon Biologics will have—comprehensive biosimilar insulin portfolio, a growing biosimilars oncology portfolio and a growing presence in autoimmune segment.
Allegro Capital served as the financial adviser to Biocon Biologics, while Goodwin Procter and Shardul Amarchand Mangaldas were the company’s legal advisers to this transaction.
Shares of Biocon fell over 12% intraday, the most in 13 months, on Monday. Trading volume on the stock was over five times the 30-day average volume at close.
The shares fell below the 50-day simple moving average and 200-day simple moving average, indicating potential downward price momentum.
Of the 21 analysts tracking Biocon, 10 maintain a ‘buy’, six recommend a ‘hold’ and five suggest a ‘sell’, according to Bloomberg data.
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