Bernstein maintained its underperform rating on Biocon Ltd. and retained a target price of Rs 326, implying a downside of 25.4% from the current market price of Rs 437.
The brokerage said the recent block deal in Biocon shares gave Viatris a safe exit but did little to alter Biocon's earnings outlook. It said investor optimism appears to reflect expectations of easing financial pressure and a smoother leadership transition, but argued that neither issue has been fully resolved.
Bernstein outlined three factors behind its negative stance.
First, it said investment in Biocon Biologics and Syngene has yet to generate sufficient revenue growth to support more than $1 billion of leverage on the balance sheet.
Second, the brokerage said policy changes are lowering barriers to competition, weakening the advantages that have supported Biocon's biosimilars business. As a result, it expects the company to take at least four to five years to cross the $2 billion revenue mark.
Third, Bernstein said the succession plan remains focused on science-led investments rather than stronger commercial execution and capital allocation.
The brokerage said Biocon's biosimilars business continues to struggle to expand its U.S. market share despite its vertically integrated model and four product approvals over the past 24 months.
It said Biocon has gained market share in ustekinumab but has done so by pricing the product about 40% below competitors such as Celltrion. Bernstein said demand in the category is declining and Biocon's market share could reach saturation sooner than investors expect, limiting its ability to build a half-billion-dollar annual revenue run rate.
Bernstein expects insulin sales to grow at an early double-digit pace but said the business remains margin dilutive and weighs on earnings. It also expects Syngene's sales and margins in FY27 and FY28 to remain broadly flat because of a weak pipeline and execution challenges.
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Biocon's Block Deal With Mylan
Bernstein said Biocon agreed in December 2025 to acquire Mylan's remaining stake in Biocon Biologics for $815 million, comprising $400 million in cash and $415 million in Biocon shares.
On Jan. 5, Biocon issued 91.97 million shares to Mylan at a price of Rs 405.78 apiece, subject to a six-month lock-up period.
The company also raised Rs 4,150 crore through a qualified institutional placement between Jan. 12 and Jan. 14 by issuing 112.66 million shares at Rs 368.35 each. Bernstein said the proceeds were mainly used to fund the cash payment to Mylan and repay related debt, while also diluting existing shareholders' holdings.
After the lock-up expired, Mylan offered its entire 5.64% stake for sale on July 13 at a floor price of Rs 378.50 a share. On July 14, buyers purchased all 92 million shares at an average price of about Rs 400 each, generating proceeds of roughly Rs 3,680 crore for Mylan, according to Bernstein.
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