Tata Capital to pick minority stake in Biocon Biologics for $30 million

Post the completion of this transaction, Biocon will hold 95.25 per cent stake in Biocon Biologics.
Private equity (PE) player Tata Capital is set to pick up a minority 0.85 per cent stake for $30 million in the biologics arm of biopharmaceutical major Biocon, the Bengaluru-based company said on Friday.

This new round of equity infusion will happen at a valuation of around $3.5 billion for Biocon Biologics.

“This equity infusion is the next step in our journey of unlocking value. Through prudent investments in R&D and high-quality manufacturing infrastructure we are confident of achieving our aspiration of serving 5 million patients through our biosimilars portfolio and achieving a target revenue of $1 billion in FY22,” said Christiane Hamacher, CEO, Biocon Biologics.

Post the completion of this transaction, Biocon will hold 95.25 per cent stake in Biocon Biologics.

The fund infusion by Tata Capital is part of a larger $200-300 million round the company plans to raise over the next few months as it is planning to float an IPO in the next three years to unlock the value in the subsidiary. Earlier in January, homegrown PE fund True North had also acquired 2.4 per cent stake in Biocon Biologics for $75 million.

Biocon Biologics is in talks with few other private equity firms interested in acquiring a minority stake in the company, the company’s Executive Chairperson Kiran Mazumdar-Shaw had earlier told Business Standard.

The company said the equity infusion by Tata Capital will enable Biocon Biologics’ future growth through prudent capital allocation, while it continues investments in R&D and manufacturing to meet the growing demands of patients worldwide.

“The investment brings together 150 plus years of brand equity of Tatas and a very strong R&D based entrepreneur in Kiran Mazumdar-Shaw with a golden track record of conceptualizing, investing and creating billion-dollar businesses by a meticulous combination of R&D strengths and an exceptional management team,” said Akhil Awasthi, Managing Partner, Tata Growth PE.

Biocon’s Biologics has been the fastest growing arm for the Bengaluru-based company. It registered a growth of 19 per cent y-o-y at Rs 692 crore for the first quarter of FY21 after reporting a de-growth of 21 per cent during the previous quarter because of Covid-19 related operational challenges. Going beyond medicine, the subsidiary recently diversified and entered the digital therapeutic segment as part of its global strategy by collaborating with healthcare solutions company Voluntis to develop and distribute a digital product for diabetic patients.

It currently has a product pipeline of 28 molecules, of which it partners with Mylan for 11 of them. Overall, the company is targeting to have at least eight biosimilars being sold in developed markets by the end of FY22 addressing a market opportunity of $33 billion. Biocon Biologics is seeking to continue to deliver at least three additional molecules between FY23 and FY25 and after which it is looking to launch two molecules per year.

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