A report by the International Monetary Fund (IMF)1 indicates that global
economic growth is projected at 3.2% in 2024 and 2025. The global economic revival has proven to be more robust than previously expected with the 2024 growth forecast being 0.3% higher than that given in October 2023 World Economic Outlook (WEO) on account of higher-than-expected economic growth across the United States and other major global markets. Higher government and personal spending supported consumption in an improving labor market scenario, while normalization of supply chains contributed to the improved momentum witnessed in the second half of 2023. However, the revised growth number is still below the historical average of 3.8% with low productivity linked growth, continuing high interest rates to rein in inflation in most markets, tighter liquidity conditions and the progressive withdrawal of fiscal support by global central banks.
In the backdrop of the above-mentioned growth expectations, inflation remained stubborn, albeit falling in most regions. The drivers of declining inflation differ by country but generally reflects the still-tight monetary policies, the positive impact of a fall in global prices for food, fuel, and other commodities, with the normalization of supply chains and gradual relaxation of the tight labor market conditions.
The global headline inflation is projected to decline steadily from 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025. Inflation is expected to fall faster in the advanced economies as compared to the emerging and developing economies.
With the fall in inflation and steady growth projections, the risk of a severe economic downturn, or hard landing has receded. On the upside, a faster fall in inflation could lead to the start of the interest rate reduction cycle by major global central banks. The adoption of a less restrictive fiscal policy should boost economic activity and promote growth; however, it carries long-term risks. Stronger structural reforms, which are fundamental changes to improve economic policies could bolster productivity with positive crossborder spillovers.
On the downside, commodity price hikes resulting from supply side risks linked to geopolitical events like the Middle East conflict, the Red Sea supply chain disruptions, and the continuing Ukraine - Russia conflict could hurt
global economic recovery. Continued economic troubles in Chinas property sector and premature fiscal tightening could further restrict growth in the global economy.
As inflation declines toward target levels across geographical regions, the central banks need to deliver a careful balancing act and adjust interest rates in-line with different inflation drivers. Overall, there is a need for a nuanced approach to navigating the current economic challenges. It requires coordinated efforts by central banks, governments, and international organizations to achieve long term growth through price stability, fiscal sustainability, and productivity improvement. Simultaneously, global issues like climate change and technological advancements would also need to be tackled across these regions.
Global Medicine Market
As per the IQVIA Global Use of Medicines 2024 report, the global use and spending on medicines is exceeding pre-pandemic growth rates and is expected to grow to ~USD 2.3 trillion by 2028, at a compounded annual growth rate (CAGR) between 5% and 8%. The markets continue to exhibit regional variations, with faster growth rates in emerging markets, i.e., in Latin America and Asia, given growing populations and improved access to healthcare. The larger and more established markets like North America, Western Europe and Japan are expected to grow slowly due to multiple factors including greater scrutiny on medicine prices, the impact of generics and biosimilars following loss of exclusivity (LOE), and the introduction of innovative but high-cost treatments targeting smaller patient populations.
The global biopharmaceutical market is set for substantial growth and expected to surge by over USD 600 billion within the next five years. The United States is expected to lead the charge and is projected to grow from USD 711 billion in 2023 to USD 1.01 trillion by 2028. This growth will be propelled by the uptake of current and new branded medicines, offset by impact losses from exclusivity (LOE), with discounts and rebates expected to be augmented by the provisions of the U.S. Inflation Reduction Act
(IRA). Europe follows as the second-largest market, anticipated to reach USD 296 billion in 2028 from USD 226 billion in 2023, with new brands and generics, including biosimilars, driving growth amid LOE impact. Japan, the third largest, with over USD 73 billion in 2023, is expected to maintain a consistent growth rate between -2% to 1%, as robust brand growth is offset by annual price cuts and ongoing shifts to generics. Meanwhile, Chinas fastpaced market is expected to grow at ~4% CAGR, and to reach USD 197 billion by 2028 from USD 163 billion in 2023, underscoring the dynamism in pharmaceutical markets. This trend reflects a robust recovery from past disruptions, highlighting the influence of both new and existing medicines across developed and emerging markets.
A key growth area for the industry in the forthcoming five years is the biotech segment, especially cell and gene therapies, alongside a maturing biosimilar segment. The Biotech segment is projected to account for 39% of global spending and is anticipated to surpass USD 890 billion by 2028. However, growth rates are expected to decelerate between 9.5-12.5% due to the influence of biosimilars. Specialty medicines, particularly those to treat chronic, complex, and rare diseases, will represent 43% of global spending in 2028 and more than 55% of total spending in leading developed markets.
From a therapy area perspective, oncology and immunology are expected to continue to be the two leading areas forecasted to grow at a CAGR between 14-17% and 2-5%, respectively, through 2028. 100 new oncology treatments are expected to be introduced over next five years, contributing to an increase in spending by USD 224 billion to a total exceeding USD 440 billion in 2028 with limited new losses of exclusivity. Treatments for autoimmune disorders are forecast to reach USD 192 billion globally by 2028, driven by steadily increasing numbers of treated patients and new products in some new immune disorders, offset by introduction of biosimilars to leading products such as Adalimumab and Ustekinumab. Biosimilars of these drugs will play a pivotal role in shaping the market dynamics by offering more cost-effective treatment options, thus influencing the overall sales trajectory of treatments for autoimmune disorders. Diabetes spending growth is slowing to low single digits in most developed markets and declining in some, especially net of rebates. GLP-1 agonists have seen rapid uptake in both diabetes and obesity, predominantly in the U.S. and other developed markets, concurring with their approvals. Global obesity spending has accelerated in the past two years with novel GLP-1 agonists gaining wider acceptance and adoption. The adoption is expected to accelerate as insurers and governments support wider reimbursement, reshaping obesity treatment and the health outcomes of millions, worldwide. New therapies to treat Alzheimers and anxiety/depression are expected to drive growth in neurology and mental health spending.
The outlook for next generation biotherapeutics includes cell and gene therapies, which are expected to grow from the current USD 10 billion spending in 2023 to USD 33 billion by 2028.
Research and Development (R&D)
The growth of the global biopharma market is predicated on the continued progress made in the R&D of new and innovative drugs and technologies. 2023 saw a recovery in R&D spend as a percentage of sales, after seeing a steep decline during the peak of the pandemic.
In the recent past, we have seen the pace of spending and dealmaking reduce within the biotech sector given a challenging funding environment. While the number of deals has been falling, high profile and high value deals indicate robust interest from investors and innovators in the next generation of therapies - for instance in metabolic conditions like Obesity; CAR-T cell therapies and antibody-drug conjugates (ADCs) in oncology.
The total number of distinct drugs in development grew from 3,200 in 2012 to 6,100 in 2022, with an extremely diverse pipeline, dominated by various forms of cell and gene therapy. Notwithstanding this, R&D productivity remains low and clinical trial timelines have increased. From 2012 to 2022, inflation-adjusted industry R&D spending increased 44%, from about USD 170 billion to USD 247 billion. However, the count of U.S. novel drug approvals remained stagnant, averaging 43 per year, meaning the failure adjusted cost to develop a single novel asset is now estimated to be as high as USD 2.8 billion.
Currently, biopharma R&D stands at an inflection point, with the limiting factor for innovation being the speed at which clinical trials can be completed, because of a shortage of study participants and clinical site professionals such as principal investigators (PIs), site coordinators and nurses. The lengthy process of discrete and fixed phases in randomized controlled trials (RCTs) has changed little in recent decades and was designed principally for testing mass-market drugs, as illustrated below.
To make clinical trials faster and more efficient, companies are trying new and simplified methods. This includes using special trial designs that can change based on results, making study rules easier by cutting down on patient visits, and improving procedures with centralized checks and targeted monitoring.2 They are also teaming up with experts around the world and in places with easier rules. The use of artificial intelligence to analyze data, telemedicine for doctor visits without needing to travel, and crowdsourcing to find participants and collect information are some of the steps helping reduce clinical trial timelines and, therefore, access of new treatments to patients.
Trends Within the Pharmaceutical Sector
The past few years have been transformative for drug development. That said, pricing and access continue to dominate discussions globally. The industry is responding to changing consumer preferences and evolving market dynamics by leveraging technology across the value chain - in R&D, manufacturing, and other areas. It is stepping up its efforts to address global health inequities and embracing sustainable practices.
The pharmaceutical industry is set to change dramatically with key trends including increased use of digital tools, custom treatments, AI and blockchain. Companies are focusing on making healthcare better and becoming more patient-focused by using these new technologies. This shift towards smarter, more personalized medicine aims to make a big difference in improving healthcare outcomes for patients. Some key trends are discussed below.
Rising Penetration of Generics, Specialty Molecules and Biologics Including Biosimilars
The global pharma market is currently valued at ~USD 1.4 trillion and is
forecasted to grow at a CAGR between 5% to 8% by 2028. The growth is driven majorly by two key trends.
• The Continued Rise of Biologics and Increased Utilization of Biosimilars: Biologics, medical drugs manufactured in or extracted from living organisms, have been revolutionizing healthcare. The share of such drugs has grown significantly to treat a variety of medical conditions especially in areas of oncology, immunology, and diabetes. Biosimilars, near-replicas of these expensive biologics, offer a more affordable option to patients and healthcare systems. Most biological medicines in current clinical use contain active substances made of proteins which differ in size and structural complexity, from simple proteins like insulin or growth hormones to complex molecules like enzymes and monoclonal antibodies. While stricter regulations as compared to traditional generics initially limited biosimilar penetration, especially in large markets like the U.S., the market has now evolved and is seeing a surge of biosimilars with 50 products approved and 39 products launched as of April 2024.
• Rise of Complex Generics and Specialty Molecules: Complex generics are intricate versions of generic drugs, while specialty molecules are high-cost prescription drugs that target complex diseases. Global Generics is a ~USD 300 billion market and is expected to grow at ~6% with upcoming patent loss events expected to contribute to the growth. Key growth drivers by therapy include oncologics, antidiabetics and anticoagulants. Specialty drugs are used to treat complex, chronic conditions such as cancer, rheumatoid arthritis, and multiple sclerosis and are expected to grow at a CAGR of 8-15%.
Overall, the rise of complex generics, specialty molecules, and biosimilars is reshaping the pharmaceutical landscape in both developed as well as emerging markets. The increased focus on cost savings and the huge patent cliff (>USD 200 billion) between 2025-30, it creates a prime opportunity for pharmaceutical players to unlock significant growth potential in years to come.
Continued Pricing Pressure on Drugs and Access to Healthcare2
The pharmaceutical industry continues to face significant pressure on drug pricing. Governments around the world continue to implement measures to control healthcare spending including introducing mandatory price controls. More recently, even in the United States, the U.S. Congress enacted the U.S. Inflation Reduction Act (IRA) which allows Medicare to negotiate drug prices directly with manufacturers, starting 2026. Public scrutiny surrounding drug pricing remains high, with surveys like one conducted by the U.S. based Kaiser Family Foundation in 2023 showing that most Americans favor Medicare to negotiate drug prices.
These issues are impacting pharmaceutical companies in several ways. Reduced profitability is a major concern, as companies potentially face lower prices for their drugs, which could discourage them from investing in post- approval research, especially for small molecules. This could hinder the development of new indications or improved formulations for existing drugs and potentially result in even higher prices at launch. A few companies have publicly indicated dropping certain small molecule R&D programs post initial assessment of the IRA.
Industry needs to innovate and explore new business models to adapt to this changing landscape. This could include exploring value-based pricing for prescription drugs, which would require assessing a drugs clinical value to determine payment, rather than relying solely on manufacturer list prices. Additionally, tailoring pricing and reimbursement approaches to regional markets presents another viable solution. There is an increased focus on R&D efficiency to offset some of these challenges, with companies collaborating with technology startups to utilize AI for faster and potentially more economical drug discovery.
Digital Innovation is Redefining Boundaries in Biopharma3
The convergence of science and technology is bringing forth a step change in the speed of innovation that further enables New Science. Robust computing power, advanced techniques like generative AI capable of creating entirely new data sets and uses of big data analytics to optimize the existing data are creating new opportunities. Experiments are moving from wet labs to computers allowing experimentation that is impossible in a physical setting. This in turn helps drive new, sustainable growth amid competition to generate new insights and faster treatment outcomes. Investments in AI-powered drug discovery reflects its immense potential.
Biopharmaceutical companies are exploring new age platforms like Global Lighthouse Network which integrate sensors, machines, and data analytics through Industrial Internet of Things (IIoT) and/or digital twin which is a virtual replica of a physical object, process, or system, and can be used to simulate production scenarios and help us generate real-time information for intelligent decision-making.
Rapidly evolving intelligent technology and scientific innovation needs collaboration between AI experts, pharmaceutical companies and regulators to address challenges like model interpretability and seamless integration with existing processes.
By focusing on practical applications and fostering a collaborative environment, the industry can unlock the true potential of digital innovation, ultimately accelerating the development of life-saving treatments and revolutionizing healthcare.
Flexible and Agile Manufacturing4
As speed and efficiency in R&D become key focus areas for companies in drug development, innovation and improvement in manufacturing processes have been equally important in helping companies become quicker and more efficient in production and launch of new products into the market.
More flexible and agile manufacturing processes allow for faster production of smaller batches, especially for personalized medicines and for rapid response to market demands.
Furthermore, the adoption of collaborative robots, or cobots, designed to work alongside humans, to perform repetitive or hazardous tasks, is on the rise. Additive manufacturing, commonly known as 3D printing, enables the on-demand creation of complex parts. This eliminates the need for large production runs and reduces inventory storage requirements.
Pharmaceutical companies are transforming their operations and embracing technologies. They are leveraging real-time data and artificial intelligence (AI) to optimize production processes, embracing smart manufacturing, enhance efficiency and meet evolving customer needs.
Shifting Consumer Behavior and Market Dynamics5
Patients are increasingly seeking treatments tailored to their specific needs and conditions. This has led to a growing demand for Precision Medicine which tailors treatments to individual patients based on their unique genetic makeup and other factors. This rise, fueled by advancements in genomics and multiomics#, is transforming healthcare by offering patients targeted treatments based on their unique genetic makeup.
This personalized approach holds immense potential to improve health outcomes through early disease detection and intervention, potentially reducing overall healthcare costs. Gene therapy and CAR-T cell therapy exemplify the power of precision medicine in delivering potentially curative treatments.
However, challenges remain. Data privacy concerns necessitate robust frameworks, while significant investments are needed in technology, infrastructure and workforce training. Additionally, the current focus on specialty care for the sick leads to high R&D costs and limited accessibility, potentially exacerbating health disparities.
Ensuring equitable access to precision health for everyone, regardless of background or socioeconomic status, is crucial to avoid aggravating existing health disparities. Overall, precision health offers a promising future for healthcare, but overcoming these challenges is essential to ensure its responsible and equitable implementation.
Peptides: The Next Frontier in Drug Discovery (with GLP-1s Leading the Charge)
Peptides are short chains of amino acids that hold promise for treating various conditions, driving their potential in areas like oncology, neurology, and metabolic disorders.
The peptide therapeutic market is poised for substantial growth. A key driver of this growth are GLP-1 therapies. Though initially developed to treat diabetes, in recent years they are being used effectively to treat obesity, improving overall wellbeing and helping reduce obesity-related comorbidities. As per research reports, the global branded formulation sales of GLP-1 drugs was valued at ~USD 34 billion in 2023. These are expected to report a robust CAGR of 23% to reach ~USD 100 billion by 2028, with Semaglutide, Tirzepatide and Liraglutide being the key contributors.
Researchers are also exploring potential applications for these drugs for cardiovascular, non-alcoholic fatty liver disease (NAFLD), polycystic ovary syndrome (PCOS) and other diseases. While peptides are generally injectable drugs, alternate formulations enabling less frequent dosing and oral delivery are being developed, which should enable better patient compliance and aid overall market growth.
Antibody-Drug Conjugates (ADCs) Emerge as a Transformative Trend in Oncology6
Antibody-drug conjugates (ADCs) are intricate structures, comprising three key components: an antibody, for specific tumor cell recognition, a potent cytotoxic drug, and a linker for controlled payload delivery, delivering a precise attack on cancer cells. ADCs have a complex manufacturing structure and hence, design optimization is crucial to maximize effectiveness and minimize side effects, thereby emphasizing its superiority over standalone or combined small molecule oncology and large molecule antibody treatments. Their complex design makes them expensive and time-consuming to develop, while having limited effectiveness in some tumor types.
ADC development with high-entry barriers owing to the complex manufacturing process and requirement of sophisticated chemistry know-how, represents an attractive opportunity for biopharma companies.
It is rapidly becoming a big opportunity to chase in oncology, with significant investments made by major players. Notably, in 2023, USD 100 billion was in invested in ADC-focused M&A and partnership activity, led by Pfizer who acquired Seagen for USD 43 billion, while AbbVie invested over USD 10 billion for ADC pioneer Immunogen, and Merck partnered with Daiichi San- kyo for a share of three of its ADCs for USD 26 billion. The ADC market opportunity is expected to reach USD 30 billion by 2028, fueled by successful drugs and a promising pipeline - over 150 clinical-stage programs, including ~40 in Phase 2 and a dozen in Phase 3 development.
Women Health Equity
Despite living longer, women tend to spend more than 25% of their lives in poor health. The biopharmaceutical industry needs to address this problem and ensure that women have equitable access to healthcare. This can boost the global economy by at least USD 1 trillion annually by 2 0407.
As per the World Economic Forum, the way forward is to identify specific health needs and disparities faced by women through historical data analysis, that will guide the development of targeted drugs and therapies accordingly. Additionally, ensuring adequate participation of women in clinical trials is critical to assess the safety and efficacy of new treatments in the female population. Investing in R&D to address unmet medical needs specific to women is critical, while one needs to be vigilant against gender bias in AI algorithms being currently used for research and development.
By addressing these points, the biopharmaceutical industry can ensure women have access to the healthcare they deserve, not only improving their lives but potentially boosting the global economy.
Importance of Environment, Social and Governance (ESG) Practices Continues to Evolve and Grow8
In addition to financial performance, the adoption and implementation of environmental, social and governance (ESG) practices are increasingly becoming vital to a companys long-term success. Various stakeholders, including governments bodies, customers, investors, and employees, are actively engaging in discussions about climate change, social equity, access to affordable and safe medicines, and ethical behavior.
The biopharmaceutical industry is working on reduction in its carbon footprint by reducing emissions, optimizing manufacturing energy efficiency, and exploring renewable energy sources. Additionally, technological advancements have paved the way for the use of green chemistry, or sustainable chemistry - an area that focuses on designing products and processes that minimize the use and generation of hazardous substances as part of the manufacturing and packing processes.
Moreover, the integration of digital technologies like AI and data analytics are beginning to play a pivotal role in enhancing sustainability. AI, for instance, can model and optimize processes for energy efficiency, while data analytics can identify areas of waste or inefficiency for target interventions.
The social pillar of ESG emphasizes the impact on people and communities. Ensuring access to essential medicines is a top priority and companies are achieving it via innovative pricing models and patient assistance programs, fostering health equity for all. Additionally, prioritizing diversity and inclusion in clinical trials is recognized as instrumental in developing treatments that cater effectively to diverse patient demographics.
The governance dimensions highlight the importance of establishing robust frameworks for accountability and transparency. The company can demonstrate its commitment to ESG by setting clear, measurable goals with
the publication of regular progress reports. Moreover, comprehensive risk management frameworks mitigate environmental, social, and financial risks associated with drug development and manufacturing.
Finally, upholding ethical sourcing principles throughout our supply chain fosters trust with stakeholders.
By embracing these emerging ESG trends, the biopharmaceutical industry positions itself for long-term success. The increased ESG focus not only cultivates strong relationships with investors and patients, but also contributes to a more sustainable future for the biopharmaceutical industry.
Business Review
FY24 Highlights:
• For FY24, Biocon Revenue from operations stood at 147,557 million, recording a year-on-year growth of 32%, led by Biosimilars and Research Services segments, growing 58% and 9%, respectively. The Generics segment grew 1% as compared to FY23.
• Biocon Biologics, Biocons biosimilar arm, completed the operational integration of the acquired global biosimilar business from Viatris in 120+ countries, one year ahead of schedule, to become a globally scaled and vertically integrated lab-to-market biosimilar enterprise committed to serving millions of patients across the globe.
• Biocon Limiteds step-down, wholly owned subsidiary, Biocon Generics Inc., acquired an Oral solid dosage manufacturing facility, located in Cranbury, New Jersey, for USD 7.7 million.
• Syngene, Biocons Research Services arm, acquired a biologics manufacturing facility (Unit 3) from Stelis Biopharma Limited for 6,170 million. The acquisition adds 20,000 litres of installed biologics drug substance manufacturing capacity for Syngene and includes a commercial scale, high speed, fill-finish unit, an essential capability for drug product manufacturing.
Other FY24 updates:
• Biocon has always strived to be a more equitable, inclusive and gender balanced organization. During FY24, we continued to develop and implement several policies and programs to facilitate these efforts. We implemented talent development programs that allow employees to build worthwhile careers for themselves, while contributing towards the organizations objectives and goals.
Our efforts were recognized through several awards and recognitions during the year:
• In 2023, U.S. Science Magazine ranked Biocon (including Biocon Biologics) #8 on the "Global top employer list" in the global biotech and biopharma sector. This marks the 11th consecutive year we have been featured on this list.
• Biocon Biologics has been recognized among the 100 Best Companies for Women and Top 100 Exemplars of Inclusion in India for the sixth time in a row by Avtar & Seramount.
• Biocon Biologics was recognized by the Life at Work Awards as one of the Top 3 companies for Sustainability and Diversity, Equity & Inclusion (DEI) in Malaysia.
At Biocon, we have integrated ESG into our strategy, operating model, and culture as we strive to build a resilient future fit institution. Through our business priorities of patient centricity, focus on science, access for all,
quality first, sustainable growth and people power, we are working towards creating long term value for all our stakeholders. Biocons efforts on this front are reflected in the scores from leading global sustainability indexes and awards received:
• Biocon (including Biocon Biologics) ESG Score improved in the S&P Corporate Sustainability Assessment from 52 to 63 and was named among global sustainability leaders for the third consecutive year in the Dow Jones Sustainability Emerging Markets Index. We were also included in S&P Global Sustainability Yearbook 2024.
• In the 2023 Carbon Disclosure Project (CDP) reports, Biocon received an "A" rating for "supplier engagement", improved its rating to "B" from "C" for "climate change" and received a "C" for "water security".
• Biocon ESG Score was 70 for the year 2023 and was awarded a Silver medal by EcoVadis for its sustainability accomplishments.
• Biocon received the Golden Peacock Award in recognition of its outstanding initiatives in the field of ESG at the 2023 Annual London Global Convention on Corporate Governance & Sustainability, held in London, UK.
• Biocon received the Forbes Marshall Energy Savings Champion Award 2023 - for efforts on energy conservation (biomass boiler, steam turbine, and heat pump).
These global recognitions reflects our relentless efforts and unwavering commitment to integrate ESG principles through our business operations and highlights our robust governance structure, overseen by our ESG and CSR Board Committees that prioritizes transparency and accountability. We are committed to combating climate change by continued efforts to increase the share of renewable power in our total power consumption, thus reducing our carbon footprint. Furthermore, we have begun deploying applied green chemistry principles, optimizing resource utilization through digitalization, enforcing stringent waste management techniques for a cleaner environment, embracing sustainable fuels, and are conducting lifecycle assessments of our manufactured and under development products, to promote a circular economy.
Beyond environmental efforts, we actively engage in numerous Corporate Social Responsibility (CSR) initiatives such as eLAJ Smart Clinics and Educational Healthcare Camps through Biocon Foundation, the CSR arm of the Company. To promote Sustainable Urban Mobility Solutions,
we funded the construction of the Hebbagodi Metro Station in Bengaluru. We also introduced an Employee Volunteering Program Policy to support various CSR initiatives of Biocon Foundation by which employees are given a paid day off to volunteer for an initiative of their interest. This is aligned with our holistic approach of giving back to society, especially benefitting the communities in which we operate.
Biocon operates four distinct business segments:
a. Generics
b. Novel Biologics
c. Biosimilars (Under Biocon Biologics Limited)
d. Research Services (Under Syngene International Limited)
Generics
Our Generics Business comprises a growing portfolio of Active Pharmaceutical Ingredients (APIs) as well as finished dosages. The API business started in the late 1990s with a fermentation based, cholesterollowering statin API called Lovastatin. Shortly after, in 2001, Biocon became the first Indian company to be approved by the United States Food and Drug Administration (U.S. FDA) to manufacture the API. In 2013, we forayed into the generic formulation space with a strategy to forward integrate our in-house APIs. This allowed us to move up the value chain while ensuring reliability of supplies to our customers and patients.
In India, the business has five API manufacturing facilities across Bengaluru, Hyderabad and Visakhapatnam, and an oral solid dosage (OSD) formulation facility in Bengaluru that has capabilities to manufacture both non-potent and potent tablets and capsules. To strengthen our foothold in the U.S., during the year, we acquired an oral solid dosage manufacturing facility in the United States, located in Cranbury, New Jersey. We are also building a new injectable facility in Bengaluru that will cater to the long-term sterile fill and finish and device assembly requirements of our Generics business. In addition to our in-house formulation manufacturing, we continue to leverage Contract Manufacturing Organizations (CMOs) capacities for formulations, as required.
Our Strategic Priorities
The growth of the Generics business has been led in a coherent, planned manner by identifying strategic priorities that define our goals and guide our actions. In FY20, we had outlined eight such strategic priorities, namely, Product Pipeline, Cost Competitiveness, Manufacturing Expansion, Strengthen Quality, Base Business, Talent Development, Regional Expansion and Digital Initiatives. Focusing on these enabled us to accelerate our progress over the last few years and have played a pivotal role in shaping where we are today.
In FY23, we recalibrated and redefined our strategic priorities. These eight priorities encompass the entire business lifecycle with the objective of bringing our products to market at the right time and right cost. These include Development Excellence, Operational Excellence, Quality Excellence, Commercial Excellence, Cost Leadership, Innovation Focus, Talent Development, Digital Initiatives. The first four priorities are focused on execution excellence. Priorities five to eight complement, support and enable the first four.
Guided by these priorities, there is a sustained focus on growing our product pipeline, with a clear priority on innovation and vertical integration. We continue to add capacities and niche capabilities in areas such as peptides, high potent drugs, and injectables. On-going efforts towards building strategic partnerships, to de-risk our supply chain and leveraging digital transformation initiatives should further aid in accomplishing our key strategic goals in the future.
Active Pharmaceutical Ingredients (API)
Global API Market:
The global Active Pharmaceutical Ingredients (APIs) market is poised for significant growth, with an estimated size of USD 206 billion in 2024, projected to reach USD 286 billion by 20289, reflecting a robust CAGR of 6.7% during the forecast period.
This expansion is forecast to be driven by various factors, including the rising demand for pharmaceuticals due to increasing prevalence of infectious, genetic, cardiovascular, and other chronic disorders, alongside a focus on affordability and technological advancements. Upcoming patent expiries of key drugs should help drive volumes for APIs.
The global small molecule API market size is projected to grow from USD 155 billion in 2023 to USD 216 billion by 2028 at a CAGR of 6.8%10.
Within therapeutic areas, the oncology segment is anticipated to witness notable growth, attributed to the escalating incidence of cancer and its risk factors, coupled with continued investment in R&D for newer drug discoveries. North America is expected to retain a substantial market share, with 38% as of 2022, followed closely by other regions. Companies focusing on complex generics and specialty chemicals are poised to be key players, emphasizing these areas for growth.
This global shift towards generics has had a positive impact on the Indian API industry. Expiring patents and rising healthcare costs globally are pushing patients and institutions towards cost-effective options. With established production infrastructure, demonstrated technical capabilities and large- scale capacities, the Indian API market is flourishing and estimated at ~USD 14 billion in 2024 and projected to reach USD 19 billion by 2028", driven by factors such as government initiatives like the "Production Linked Incentive (PLI)" scheme and supportive policies like "Make in India." Indias cost advantage, strong domestic demand fueled by a growing population and rising healthcare awareness, and export potential further contributes to market growth. Emerging trends such as a focus on biologics and the branded segment are shaping the landscape.
Our Generic API Business:
Biocons API business comprises a balanced pipeline of 50+ products covering therapeutic areas like Cardiovascular, Anti-Diabetics, Weight Management, Immunosuppressants, Oncology, Neurology and a few specialty and niche molecules. We leverage our strengths in R&D and manufacturing technology platforms, especially fermentation, to develop complex and differentiated APIs. We are one of the largest manufacturers of statin and immunosuppressant APIs in the world. While our longstanding strengths lie in fermentation technology, large-scale chromatography, and synthetic chemistry, we have worked continuously to expand our capabilities further. This includes building a broad portfolio encompassing high potent APIs (HPAPIs) and peptides especially GLPs, targeting diabetes and obesity.
We reach ~750 global customers in 100+ countries including U.S., Europe, and large emerging markets. We have had an excellent track record of regulatory compliance with leading global agencies, including the U.S. FDA, EMA, TGA Australia, Health Canada, ANVISA Brazil and Cofepris Mexico.
| Our API Portfolio* - | |||
| Cardiovascular | Anti-Diabetics | Immunosuppressants | Oncology |
| Atorvastatin | Liraglutide | Tacrolimus | Dasatinib |
| Fluvastatin | Dapagliflozin | Mycophenolate Mofetil | Lenalidomide |
| Ivabradine | Empagliflozin | Mycophenolate Sodium | Cabozantinib |
| Pravastatin | Linagliptin | Everolimus | |
| Rosuvastatin | Repaglinide | Sirolimus | |
| Simvastatin | Sitagliptin | Pimecrolimus | |
| Sacubitril | Vildagliptin | ||
| Blood and Blood forming organs | Multiple Sclerosis | Anti-fungal | Others |
| Apixaban | Fingolimod | Micafungin | Orlistat |
| Dabigatran | Teriflunomide | Anidulafungin | Deferasirox |
| Rivaroxaban | Glatiramer Acetate | Posaconazole | Brinzolamide |
| Mirabegron | |||
| Lurasidone |
*Sample portfolio, does not include molecules under development
Generic Formulations
Global Generic Formulations Market:
The global generics drug market is anticipated to grow to ~USD 600 billion by 202812, from ~USD 450 billion in 2023, primarily driven by the increasing incidence of both communicable and non-communicable diseases, boosting the demand for affordable medicines. Furthermore, patent expiration of branded medicines is enabling access to lower cost version of drugs in an environment of a rising prevalence of chronic diseases. A shift towards patient-centric drug development approaches, the emergence of personalized medicine, regulatory support for orphan drugs, and an increase in research and development investments should continue to aid growth of the generics drug market.
The U.S. remains the largest market for generic formulations and manufacturers continue to invest in regulatory, manufacturing, and technological capabilities to tap into the opportunities.
U.S. approvals also serve as a platform to introduce products into other key markets globally, thereby enabling companies to leverage their R&D investments and infrastructure. Supply chain continuity remains paramount to avoid shortages, ensuring continued access to medications for customers and patients.
As the market recovers from the pressures witnessed during the COVID-19 pandemic, companies are slowly shifting focus towards developing more complex products, in line with the evolving drug development landscape and economic realities. These R&D investments are expected to offer higher or sustainable value in terms of growth and profitability in the coming years. Opportunities in areas of oncology, diabetes and obesity, and related indications will be key areas for investments and growth in the coming years.
Since the commercialization of our first generic formulation in the U.S. in 2017, we have launched seventeen drug products in the U.S., three in Europe and a few in most-of the-world markets, leveraging the U.S. approvals. We anticipate commercializing 4-5 products every year in the U.S. market and strengthening our presence in Europe and most-of the-world markets.
We have 60+ drug products in various stages of classification - commercial, tentatively approved, filed or under advanced development. As of March 31, 2024, our portfolio addresses 10 of the top 50 drugs in the U.S. market with the combined addressable market before accounting for discounts and rebates for this portfolio more than USD 130 billion (IQVIA MAT March 2024). Many of our products are vertically integrated, giving us better control over the value chain, thereby ensuring continuity of supplies to customers and eventually to patients.
Diabetes, Cardiology, Oncology, Immunology, Auto-immune indications, and Obesity continue to be our focus therapeutic areas. Peptides, as a platform technology, is a key area of focus for us. As the business model of Biocons Generics business evolves in the coming years, we expect peptides, particularly GLPs, to play a major role as future growth drivers. We are building our peptides technology capability and capacity to take advantage of this large and strategic opportunity, expected to exceed USD 100 billion in innovator sales over the next decade, as per analyst estimates. These are injectable formulations with a drug device combination and complex characterization. Filings from the peptides portfolio have already been made with global regulatory agencies including those in the U.S. and Europe.
We have the capability to manufacture oral solid dosages (OSDs) - tablets and capsules, both potent and non-potent, in multiple dosage forms like immediate release formulations and modified release formulations. We also have injectables with complex API (e.g., peptides and low molecular weight heparins) and complex formulations (suspensions, long acting in situ gels and lyophilized), available in vials, drug-device combinations like pre-filled syringes (PFS), and pen device and auto-injectors (both disposable & reusable), for which we have built capabilities over the years.
We continue to expand and invest in our portfolio and build in-house manufacturing capabilities and capacities that will drive our future growth.
Our Generic Formulations Portfolio* -
| Therapeutic Area | Molecule | US | Dev Markets: ex-US | MoW1 |
| Rosuvastatin Calcium | UK, EU$ | |||
| Simvastatin | ||||
| Atorvastatin | ||||
| Cardiovascular | Pravastatin | |||
| Labetalol HCI | ||||
| Dabigatran | UK, EU$ | |||
| Prazosin | ||||
| Rivaroxaban | UK, EU$ | |||
| Everolimus | EU$ | |||
| Oncology | Pemetrexed | TA | ||
| Lenalidomide | TA | UK, EU$ | ||
| Dasatinib | TA | |||
| Immunosuppressants | Tacrolimus | |||
| Mycophenolic Sodium | ||||
| Fingolimod | UK, EU$ | |||
| Multiple Sclerosis | Teriflunomide | |||
| Dimethyl fumarate | UK, EU$ | |||
| Liothyronin (Hypothyroidism) | ||||
| Liraglutide(Anti-diabetic & Anti-obesity) | UK | |||
| Aminocaproic acid Tablet & Oral Sol. (Antifibrinolytic) | ||||
| Dapagliflozin (Anti Diabetic) | TA | |||
| Esomeprazole DR (GI) | ||||
| Others | Dorzolamide (Ophthalmic) | |||
| Dorzolamide Timolol (Ophthalmic) | ||||
| Posaconazole (Anti-Fungal) | UK, EU$ | |||
| Famotidine (GI) | ||||
| Vigabatrin Tablet & Oral Sol. (CNS) | ||||
| Oxcarbazepine (CNS) |
1 MoW - Most of the World markets : $Select EU countries : TA - Tentative approva/ : *Sample portfolio as on 31s1 March 2024; does not Include molecules under development.
Generics - FY24 Highlights:
Strong Growth in Our Generic Formulations Business in the U.S. Market: During the year we witnessed strong revenue growth in our generic formulations business in the United States driven by success in winning multiple contracts across our portfolio of molecules. Most notably, our statins portfolio, comprising Atorvastatin, Simvastatin, Rosuvastatin, and Pravastatin finished dosages maintained or improved its volume market share over FY23. Furthermore, during the year, we expanded our product portfolio and launched new products including Famotidine oral suspension and Liothyronine Sodium tablets.
Continued Focus on Geographical Diversification: During FY24, we continued to expand our presence across markets for both API and Generic Formulations with new approvals, tender wins, and new partnerships.
In March 2024, we achieved a significant milestone by becoming the first company to receive approval in a major regulated/ICH market for our complex formulation Liraglutide (gVictoza? and gSaxenda?), in the UK. This validates our strategic focus and demonstrates our capability to develop difficult-to-make, vertically integrated drug products. It also strengthens our position in the market to exploit future growth opportunities.
In China, we received our first generic formulations approval for Mycophe- nolate Sodium (MPS), an immunosuppressant used to help prevent organ transplant rejection. This approval paves the way for the Companys finished dosage formulations foray into China, a key strategic market.
We won tenders in several countries like UK, Scotland, Singapore, and Saudi Arabia, to gain us a foot-in-the-door in these markets that are part of our strategic growth plans while strengthening our presence through strategic partnerships, including out-licensing deals across, geographies like Canada, Mexico, and Brazil.
Expanding Our Portfolio and Securing Approvals: During the fiscal, we made 38 filings and received 24 approvals for our drug products across U.S., EU, UK, and MoW markets. Building on our oncology pipeline, we received tentative approval for Dasatinib tablets and Lenalidomide capsules in various strengths from the U.S. FDA. The year also saw us file 37 drug master file (DMFs) in different markets, including three in the U.S.
Bolstering Manufacturing Capacities and Capabilities: We continued to invest in expanding our capacities, as well as in adding complementary capabilities to support our growth plans. We acquired our first manufacturing facility outside of India, in the U.S. The oral solid dosage manufacturing
facility located in Cranbury, New Jersey will help strengthen our foothold in the North American market and strategically enhance and complement Biocons existing manufacturing capabilities. It also enables us to supply the U.S. government procurement channels. The facilitys employees have transitioned to Biocon and the process of qualifying the site for our products has been initiated.
During the year, at Visakhapatnam, we successfully completed validation activities at our greenfield immunosuppressant manufacturing facility. We also received a Certificate of Suitability (CEP) from EDQM, the European regulator. The facility is expected to be inspected and subsequently qualified for commercial supplies by other major regulators in the next fiscal. These new approvals, as they are received, will help address the growing demand for immunosuppressants across global markets. At another site in Visakhapatnam, we are expanding our synthetic API facility dedicated to potent oncology APIs.
Our peptide API facility in Bengaluru successfully completed process validation activities for one peptide molecule while development and validation batches are under progress for others. We also broke ground on a new injectable facility and are further expanding our non-immunosuppressant fermentation and peptide capacities. In Hyderabad, qualification of our new and upgraded non-oncology-synthetic API facility has started with process validation for products having been initiated.
These new and upgraded capacities and capabilities will help us deliver upon our strategic long-term business plans.
Key Operational and Digital Initiatives: In FY24, manufacturing excellence and digital transformation continued to be in focus. Process validation activities have been carried out across sites and we have worked continuously to expand capabilities, optimize cost, improve efficiency, and enhance sustainability. By embracing digital transformation, we have made significant advancements in automation and digitization. We have successfully launched the R&D workbench and implemented paperless preventive maintenance at multiple sites, launched Bio Path Zero, a digitized portal for Environment Health and Safety initiatives, and introduced an online dashboard for monitoring all utilities at one place in Bengaluru, which is a testament to our adoption of new technology as well as our commitment to be environmentally friendly. Throughout the year, we progressively rolled out the Salesforce module, HR workforce planning tool, Artwork management tool, Regulatory Information Management System and Business case automation workflows. These initiatives, along with the launch of the GxP inventory tracking solutions, will be essential in supporting our continued growth.
Focus on Talent Development and Building an Inclusive Work Culture: Biocon remains committed to holistic talent development for all Bioconites. Our continued focus on leadership capability building through our flagship programs like BioAspire, BioLeap, and BioEdge, nurtures strategic, team building and collaboration skills across levels. Additionally, initiatives such as the Managerial Effectiveness Program and Cross-Functional Collaboration Workshop empower managers and teams to excel in their roles. In our effort to foster creativity and drive a culture of innovative problem-solving, Biocon conducted its inaugural Hackathon this year. Through these and many more such initiatives, we aim to cultivate a high-performance work culture with highly enabled, empowered, and accountable Bioconites. This was clearly reflected in our Employee Satisfaction (ESAT) survey for FY24, which boasted a remarkable 91% overall satisfaction score, along with other positive feedback, with 91% participation from the Generics business workforce.
Diversity, Equity, Inclusion, and Belonging (DEIB) continue to be a focal point for our organization. In our Generics business, achieving a gender diversity percentage of 17.6% emphasizes our dedication to enhancing female rep
resentation in our workforce. We actively engage with women Bioconites through various platforms like focus group discussions, leadership connections, and one-on-one sessions, ensuring their voices are heard and valued. Our dedication towards equity and inclusion was showcased in our inaugural celebration of International Mens Day. Initiatives like A & B shift enablement for women on the shop floor allow them the flexibility to work in multiple shifts. Workshops on gender balance, parental support, and health and wellness reflect our holistic approach to fostering an inclusive culture. Furthermore, our National Apprenticeship Program Scheme (NAPS) ensures a diverse pool of skilled resources, supporting talent development across entry-level roles. New policies such as Employee Volunteering and Paternity Leave underscore our commitment to employee well-being and social responsibility, contributing to a positive work environment.
Ensuring Supply Chain Continuity and Minimizing Environmental Footprint: At Biocon, we prioritize supply continuity and to achieve this we are actively working to de-risk our supply chain. This has been especially critical for key APIs, and we are working towards this achieve this through alternate vendor development in India and elsewhere either via technology transfer, or longterm arrangements or both. On the drug-product side, along with having in-house capacity and capability, we are working with CMOs to de-risk our supply chain across geographies. Acquisition of the oral solid dosage facility in the U.S. is a step further in ensuring continuity of supply to customers in that geography.
In line with our sustainability roadmap, we have implemented measures towards auditing our top suppliers on ESG aspects. ESG awareness sessions were conducted for 35 suppliers across the globe, either in-person or via virtual sessions. During the year, we introduced the use of electric vehicles (EVs) for inter unit transfer of materials for Bengaluru sites. This step aligns with our efforts and roadmap to reduce GHG emissions as part of our Scope 3 value chain.
Furthermore, in FY24, ~91% of the electricity requirements at Bengaluru sites were met via renewable power sources like wind and solar. We have also implemented the utilization of green fuel, specifically biomass briquettes, for boiler operations at one site in Bengaluru. This initiative not only reduces our reliance on traditional fossil fuels like coal or natural gas, but also minimizes our carbon footprint, aligning with our GHG emission reduction goals.
Ensuring Continued Compliance Through Quality Management: At Biocon, excellence is our benchmark, and our commitment to quality and compliance enables us to achieve this across all functions. Our manufacturing sites have undergone several regulatory inspections during FY24 as part of new product approval, and/or verification of compliance. The successful outcome of these inspections is a testimony to Biocons strong quality systems.
In May 23, U.S. FDA conducted a GMP and pre-approval inspection of our Oral Solid Dosage facility in Bengaluru and a pre-approval inspection of the Hyderabad API facility, with successful outcomes. The inspections have been closed with the Company receiving Establishment Inspection Report (EIR) for both. In October 2023, after TGA, Australia conducted a GMP inspection of the Visakhapatnam API facility (Site 5) without any critical observations and subsequently awarded the site a GMP certificate. Additionally, the same facility secured a GMP compliance certificate from ANVISA, Brazil. Cofepris, Mexico inspected the Hyderabad facility in October 2023 and granted it a GMP certification.
In January 2024, we established a Central analytical laboratory for API in Bengaluru. Establishment of this new central laboratory should help in expediting Analytical method validations for new product launches, thereby aiding business growth.
During FY24, our generic formulations business saw a sustained performance, supported by a gradually improving environment in the U.S. Growth was driven by higher volumes of base business products as well as new product launches in the U.S. and MoW markets. However, pricing pressure, increased market inventory levels and regulatory challenges at the customers end impacted offtake in the API business, resulting in a subdued performance during the year.
Overall, the Generics business contributed 19% to consolidated group revenues, with revenues at ?27,985 million in FY24 as compared to ?27,644 million in FY23, reflecting a growth of 1%.
Generics - FY25 Outlook:
In FY25, we expect business performance to be primarily driven by continued traction in the generic formulations business. Growth in base business volumes, new product launches, regional expansion in MoW markets and commissioning of in-house manufacturing capacities for commercial use are expected to be the growth levers. Although the pricing environment in the U.S. has shown stability during FY24, challenges remain with supply shortages across products. Customers are seeking partners who can be reliable suppliers to them. Biocon is well positioned to navigate this environment by leveraging its portfolio, vertical integration, and its quality and compliance track record. Continuous efforts towards attaining cost competitiveness and leadership by proactive implementing cost improvement plans (CIPs) and operational improvements plans (OlPs) to mitigate the impact of future cost pressures and optimize operational efficiency should ensure long term business continuity across the generic business.
Novel Biologics
Our Novel biologics business is focused to address unmet patients needs with a key focus on oncology and immunology. The lead molecule, Itolizumab, is a clinical stage first-in-class immune-modifying monoclonal antibody that targets the CD6-ALCAM signaling pathway. It is Biocons second global lab to market novel biologic after Nimotuzumab. In 2017, we licensed the rights to develop and commercialize Itolizumab to U.S.-based biotechnology company, Equillium Inc. for the U.S., Canada, Australia, and New Zealand. Itolizumab is currently being developed for indications such as acute graft-versus-host disease (aGVHD), systemic lupus erythematosus (SLE) / lupus nephritis (LN), and ulcerative colitis. Equillium has received U.S. FDA Fast Track & Orphan Drug designations for Itolizumab for the prevention and treatment of patients with aGVHD and Fast Track designation for LN.
Biocon has also received Orphan Drug designation from the EMA for treatment of graft-versus-host disease as well as positive opinion from the agency for pediatric investigation for the treatment of aGVHD. The drug was granted Restricted Emergency Use approval in 2020 in India for the treatment of Cytokine Release Syndrome in Moderate to Severe acute respiratory distress syndrome (ARDS) patients and was repurposed for the prevention and treatment of COVID-19 complications.
Biocon incubated Bicara Therapeutics, is a clinical-stage biotechnology company developing first-in-class meaningful therapies for cancer patients. The dual-action antibodies being developed combine the precision of well-validated, tumor-targeting antibodies with the power of tumor-microenvironment (TME) modulators for synergistic, durable impact at the site of the tumor. In line with its vision to develop meaningful therapies for cancer patients, Bicara continues to make progress on its lead molecule, BCA101, a first-in-class EGFR / TGF-p trap bifunctional antibody that both inhibits EGFR and disables TGF-p directly at the site of the tumor. With this approach, Bicara hopes to achieve superior anti-tumor efficacy with an improved therapeutic window. A first-in-human, Phase 1/1b study in EG- FR-driven tumors was activated in July 2020 at leading institutions in the U.S. and Canada.
Novel Biologics - FY24 Highlights:
Our partner, Equilliums strategic focus on clinical execution in the past year has positioned the company for significant milestones in FY25. The company has made notable progress in advancing Itolizumab through various clinical studies. A key achievement during 2023 was the completion of the Phase 1b EQUALISE study of Itolizumab in patients with LN, with presentation of the positive data made at the American Society of Nephrology (ASN) and the American College of Rheumatology (ACR) annual meetings. The topline data has also been provided to Ono Pharmaceutical Co., Ltd., representing the first of two data set triggers leading to their decision as to whether to exercise their option to acquire itolizumab.
Furthermore, Equillium expects to announce the results of the interim review by the data monitoring committee of the Phase 3 EQUATOR study of Itolizumab in patients with aGVHD in the third quarter of CY24. This would represent the final data deliverable to trigger Onos option exercise period. Onos decision is expected in the second half of 2024.
The strategic partnership with Ono Pharmaceutical Co., Ltd., is particularly significant given Onos reputable track record of bringing important molecules to market via partnerships. Equilliums collaboration with Ono not only validates the potential of Itolizumab but also provides access to resources and expertise that can accelerate its development and commercialization efforts.
During FY24, Bicara presented positive interim data from its ongoing, open- label Phase 1/1b dose expansion study of BCA101, at the European Society for Medical Oncology (ESMO) Congress evoking strong investigator interest.
Backed by the encouraging, clinically meaningful interim results of the Phase 1/1b dose expansion study of BCA101, Bicara successfully closed a USD 165 million Series C financing in December 2023. The financing was co-led by Braidwell LP and TPG, with participation from other new and existing leading healthcare investors. With this latest close, Bicara has to date cumulatively raised USD 355 million. The proceeds from the financing should accelerate clinical studies of BCA101 for multiple cancer types.
The dilution resulting from the fund raise has resulted in Biocons shareholding being reduced to 14% and the loss of significant influence over Bicara. Hence it will no longer be an associate company of the Biocon Group.
Biosimilars (Biocon Biologics Limited)
Biocon Biologics Limited (BBL) is a unique, fully integrated global biosimilars player with a demonstrated track record of success across the value chain from R&D through to manufacturing and commercialization. BBL is a subsidiary of Biocon Limited. BBL is the largest contributor to the Companys revenues and continues to be the fastest-growing business segment within the Biocon group.
The early 2000s marked our entry into biosimilars when we became the first company worldwide to develop and commercialize bHuman Insulin in 2004 using a proprietary Pichia pastoris platform. We subsequently went on to developing monoclonal antibodies (mAbs) and therapeutic proteins targeting cancer and autoimmune diseases using mammalian cell culture- based expression systems. As an early entrant in the biosimilars business, we have invested more than USD 1 billion to date to build world-class R&D and global-scale manufacturing capabilities.
FY24 was a transformative year for Biocon Biologics. The business delivered a strong performance, crossing the USD 1 billion revenue threshold while maintaining business continuity and integrating a highly complex, geographically diverse enterprise across 120+ countries one year ahead of schedule.
The acquisition of Viatris global biosimilars business brought complementary capabilities including a direct presence and related infrastructure in several key markets including the U.S., Europe, and key Emerging Markets.
With robust demand for our products and several new launches planned, we expect to maintain in the short term and then accelerate the growth momentum over the medium term as we leverage our end-to-end capabilities to unlock value for all stakeholders.
Biosimilars: An Attractive Market with Growing Acceptance of Stakeholders
Biosimilars Represent a Significant and Rapidly Expanding Market Opportunity.
Biosimilars are large, complex molecules produced from living organisms, tissues, or cells. A biosimilar is highly similar to an already approved biological medicine (the reference product! in terms of structure, biological activity, efficacy, safety, and immunogenicity profile.
Biosimilars have no clinically meaningful difference versus the biologics (reference product) and are developed and manufactured with the same scientific rigor and quality guidelines. However, biosimilars are more affordable alternatives to their reference product and can address the affordability and access challenge, while ensuring the same treatment outcome.
Like generics, biosimilars offer cost-effective solutions for healthcare systems by broadening patient access to biologic treatments, which are increasingly becoming the standard of care and easing the strain on healthcare budgets. Biosimilars, with their larger molecular size and more intricate structure compared to small-molecule generics, bring additional expenses and complexity in terms of development and production process. The development of biosimilars might span 5-8 years and incur an individual cost of USD 100-200 million. In contrast, a simple small molecule generic can be developed for as low as USD 1-2 million and may take approximately two years to develop.
Biosimilars are a relatively new but rapidly growing and high value segment of the global pharmaceutical industry. Given the increase in incidence of several non-communicable diseases like Diabetes and Cancer, improved diagnosis, a proven track record of safety and efficacy, and prescriber familiarity and confidence, biosimilar adoption in most major markets increased to ~80% or more.
Presently, over 50 biosimilars have been approved in the U.S. spanning 16 molecules while 90 biosimilars, spanning over 20 molecules, have been approved in Europe.
As a result of this increase in adoption and an abundant pipeline of over 45 blockbuster biologics set to lose exclusivity (or patent expiry) between now and 2030, the global biosimilar market is expected to expected to grow 2.5x to about USD 56 billion by 2030.
Competitive Landscape:
The biosimilars landscape has been evolving rapidly and players today can be classified into 4 broad cohorts - Originators, Generics, Biosimilars focused, and Development focused or niche companies.
Some originators are de-prioritizing biosimilars and we are seeing several large generics and niche players entering the space through partnerships, either in R&D or commercialization.
Exhibit 3: Competitive Landscape
Companies are pursuing varying strategies to win in the context of increased competition, price erosion and an evolving regulatory landscape. However, Biocon Biologics operating model of end-to-end to capabilities, industry leading portfolio with focus on biosimilars and an early entry into this space presents it with a unique, competitive edge.
Pricing Trends:
An increase in pricing pressure is being seen across geographies as competition intensifies. The rate and extent of price erosion varies considerably based on market archetype and product.
For example, in the Medical Benefit segment in the U.S., we see a lower initial discount of —5-10% at launch but a steady increase to ~50% erosion within the first 2-3 years. This continues to be a significant factor even several years after launch. With an increasing number of players in high-value molecules, this trend is likely to persist.
In Europe, France for instance, which is largely a retail market, we are seeing a discount of approximately —60% over a period of 3-5 years but from a significantly lower pricing base as compared to the U.S. When it comes to Emerging Markets, we are seeing an increase in discounting to similar levels as seen in Europe, especially in Tender Markets which largely operate as winner takes all.
Given the growing disease burden and significant savings potential that biosimilars offer governments and health systems across the globe, we are seeing favorable movements in both the regulatory and policy landscape across markets that are gradually reducing the barriers to entry and making them more attractive.
In 2026 and 2027, the global annual savings from biosimilars could be more than USD 100 billion. By 2027, the global cumulative savings from biosimilars could be as high as USD 383 billion, according to IQVIAs recent Global Use of Medicines report.
Regulations governing the approval and marketing of biosimilars vary across regions. The European Union (EU) was a pioneer in the space with EMA being the first major regulatory agency to establish a framework in 2003 that outlined an abbreviated pathway to develop and approve biosimilars. The U.S. FDA followed suit in 2010.
However, over the past years we have seen regulators globally adopt measures to further simplify approval pathways and reduce the development costs and time. One example of this is the FDA Modernization Act 2.0. In the UK, the MHRA has removed the need for Phase III trials, while in the U.S., the FDA has removed the need for Phase III trials for approving interchangeable Insulins and has approved interchangeable biosimilars (i.e., non-insulins products e.g., bAflibercept) without switching data. The regulators are also receptive to further reducing trial sizes and focusing more on non-clinical data to establish biosimilarity.
On the policy front, we are seeing governments enacting measures such as the Inflation Reduction Act in the U.S., to manage prices and the incentivizing of local manufacturing, such as in Saudi Arabia. However, the full impact of such legislations are yet to be seen.
Biosimilars Market: Learnings from Adalimumab in the U.S.
The launch of biosimilar bAdalimumab in the U.S. in 2023 was one of the most awaited events in the biosimilars space given it represented a more than USD 18 billion opportunity in originator sales and there were ~9 biosimilars players. On the pricing front, we saw players offering discounts up to 85% on the originators Wholesale Acquisition Cost (WAC). However, the market dynamics played out very differently than what stakeholders including the originator had predicted. The originator (brand name Humira) was able to retain a preferred or exclusive status on payor formularies and offer high rebates, thereby providing no incentive to prescribers or the payors to switch to biosimilars, which translated into the originator retaining over 98% of the market by volume.
Looking ahead, we expect the market to meaningfully open to biosimilars in H2 2024 and 2025, as the originator is excluded from formularies.
Advanced Markets - North America
Our business in the U.S. continues to see strong demand across commercial products and we have seen a significant increase in market shares.
On the Oncology front, Fulphila, our bPegfigrastim, increased its market share by 7% to 21% in March 2024 while Ogivri, our bTrastuzumab, increased its share by 8% to 18% in March 2024. On the diabetes front, Semglee and our unbranded Glargine product increased its share by 3% to 15% in March 2024. However, if closed door networks not captured in IQVIA reporting were added, our share would be ~3% higher.
This growth, driven by several key formulary wins, increased pull through at the physician level and a robust pricing strategy, is testament to the strong foundation we have built in the U.S.
Exhibit 6: IQVIA Volume Market Shares for Commercial Products in the U.S.
| Product | Mar-24 | Mar-23 |
| Fulphila (bPegfilgrastim) | 21% | 14% |
| Ogivri (bTrastuzumab) | 18% | 10% |
| Semglee (bGlargine) | 15% | 12% |
Source: IQVIA; BBL Analysis
In Canada, Ogivri, increased its share to 28% and Hulio, our bAdalimumab, increased its share to 8% in March 2024. We also onboarded a large customer for our insulins portfolio.
Advanced Markets - Europe
In Europe, we have put in place a bespoke country-specific operating model and strategy considering the nature of the market (e.g., tender vs. retail), size of the opportunity and other parameters to ensure success in these markets.
As a result, we have seen our market shares either remain stable or increase depending on the product with Germany and France being the key value and growth drivers. This is of particular significance considering we only completed the integration of the acquired business in December 2023 and had been managing the business directly since the last quarter of the fiscal.
Our bAdalimumab franchise remains very strong with a market share of 6% pan Europe and shares of 20% in Belgium, 18% in Germany and 11% in France. We have seen a significant increase in market share for Abevmy, our bBevacizumab from 1% to 6%, on the back of several tender wins, growth in the retail segment and new launches in large markets such as France, Belgium, and Greece.
We are also seeing successes in capturing new market opportunities and expanding our reach in the top 5 European countries.
Exhibit 7: IQVIA Volume Market Shares for Commercial Products in Europe
| Product | Q4 CY23 | Q4 CY22 |
| Fulphila (bPegfilgrastim) | 8% | 5% |
| Ogivri (bTrastuzumab) | 10% | 12% |
| Abvermy (bBevacizumab) | 6% | 1% |
| Semglee (bGlargine) | 4% | 3% |
| Hulio (bAdalimumab) | 6% | 6% |
| Nepexto (bEtanercept) | 2% | 1% |
Source: IQVIA; BBL Analysis
Advanced Markets - Japan, Australia, and New Zealand (JANZ)
In JANZ markets, we successfully transitioned the business and have integrated partners across the region, laying the groundwork for future market opportunities and continued growth.
Emerging Markets
On the Emerging Markets front, we have set up direct commercial infrastructure in several large markets such as Brazil and Philippines, allowing us to get closer to patients and customers, thereby allowing us to maximize the value from our existing and pipeline products.
During the year we expanded our geographic footprint significantly and had 18 new launches and 31 approvals across LATAM, AFMET and APAC regions including the direct launch of bBevacizumab in Brazil.
Our Insulins franchise remains strong, and we have captured dominant market shares in several key countries such as Mexico and Malaysia. We have also seen a consistent increase in market share for our mAbs portfolio on the back of several key tender and customer wins across geographies.
Exhibit 8: Market Shares by Volume for Commercialized Products in Key Markets, FY24
Emerging Markets
| Region | Country | Product | Market Share |
| Brazil | Trastuzumab | 43% | |
| LATAM | Rh-Insulin | 95% | |
| Mexico | Insulin Glargine | 95% | |
| Insulin Glargine | 80% | ||
| Malaysia | Rh-Insulin | 38% | |
| APAC | Trastuzumab | 34% | |
| Philippines | Trastuzumab | 61% | |
| Indonesia | Trastuzumab | 57% | |
| Bevacizumab | 90% | ||
| South Africa | Trastuzumab | 88% | |
| Pegfilgrastim | 75% | ||
| AFMET | Morocco | Trastuzumab | 60% |
| Saudi Arabia | Bevacizumab | 50% | |
| Pegfilgrastim | 50% | ||
| Egypt | Trastuzumab | 50% |
Source: IQVIA + Partner and distributor sales report.
Partnership with Eris Lifesciences - India
In November 2023, we divested our non-core Nephrology and Dermatology branded formulations business units in India to Eris Lifesciences. Building on this relationship, we also entered into a long-term commercial collaboration with Eris to expand patient access to our portfolio of Metabolics, Oncology, and Critical Care products in India for a total transaction value of ?12,420 million, effective April 1,2024. This represents an accretive multiple of 3.4x of revenues and 18x of EBITDA. As part of the collaboration, a 10-year supply agreement was signed with Eris.
These collaborations are in-line with Biocon Biologics strategy to unlock value from its legacy business of branded formulations built over the past two decades and deliver high-quality, lifesaving biosimilars to millions of patients in India.
Biocon Biologics: Portfolio and Regulatory Milestones
During the year we achieved several key regulatory milestones while our pipeline, which will be a key future growth driver, continued to progress well.
bUstekinumab: The U.S. FDA has accepted our Biologics License Application (BLA) for bUstekinumab for review under the 351(k) pathway. We have also signed a settlement and license agreement with Janssen Biotech Inc., and Johnson & Johnson, clearing the way to commercialize the product in in the U.S. no later than February 22, 2025, subject to U.S. FDA approval. This positions us to be amongst the first wave of entrants in the U.S.
The product has also been filed in several other key geographies. Once approved, this will expand our Immunology portfolio and complement our bAdalimumab and bEtanercept products.
bAflibercept: We received approval from several key regulators including the U.S. FDA, MHRA, UK and European Medicines Agency (EMA) and provisional approval from Health Canada. It is important to note that our product was first to be approved for interchangeability in the U.S. and hence qualifies for exclusivity.
We are currently in litigation with the originator in the U.S. but have signed a settlement agreement with Bayer Inc. and Regeneron Pharmaceuticals, Inc., paving the way for the introduction of Yesafili?, our bAflibercept, into the Canadian market in July 2025. Once launched, bAflibercept will mark our entry into the ophthalmology segment thereby expanding our patient reach.
bDenosumab: We are on-track to submit regulatory filings before the end of CY24.
bPertuzumab: Global Phase III clinical trials for bPertuzumab have been initiated.
Other Products: All pipeline Products have progressed as planned.
Exhibit 9: Summary of Biocon Biologics Product Portfolio
| Oncology | Immunology | Ophthalmology | Bone Health | Diabetes | Others | |
| Therapy Area | R | ? | sS | |||
| Approved or Commercial | • Pegfilgrastim | • Adalimumab | • Aflibercept | • rh-Insulin | ||
| • Trastuzumab | • Etanercept | • Glargine U100 | ||||
| • Bevacizumab | • Aspart | |||||
| Late Stage | • Denosumab | • Ustekinumab | • Denosumab | |||
| • Pertuzumab | ||||||
| Early Stage | 2 undisclosed assets | 3 undisclosed assets | • Glargine U300 | 1 undisclosed | ||
| • 1 Undisclosed | asset |
Facility and Audit Updates
Our mAbs Drug Substance (B3) manufacturing facility in Bengaluru has been approved by the EMA and other regulatory agencies for global supplies of bTrastuzumab and bBevacizumab. This is the largest facility in India for manufacturing mAbs and will allow us to meet the significant increase in demand we are seeing for these products.
We have made considerable progress on the Phase II expansion of our Malaysia facility for Insulins and Insulin Analogs which will double our capacity for both Drug Substance and Drug Product and will become one of the largest facilities of its kind in the world. The expanded facility will play a key role in servicing the increased demand we are seeing for our Insulins portfolio globally, especially in-light of several players prioritizing GLP-1 receptor agonists.
We continue to build a distributed, global supply chain and an external manufacturing network to both expand our capacity multifold as well as de-risk site-specific dependencies.
During the year the U.S. FDA issued a Complete Response Letter (CRL) for our bBevacizumab filing citing the need to complete a pre-approval inspection of our India facility. The CRL did not identify any outstanding scientific issues.
We also received a CRL for our bAspart filing from our Malaysia site. The CRL did not identify any outstanding scientific issues but cited the need for the completion of a pre-approval inspection. We have completed the implementation of all Corrective and Preventive Actions (CAPA) as per committed timelines and have provided the U.S. FDA with a comprehensive update.
As the next step, we are awaiting Agencys inspection of both sites, which will pave the way for approval of our bAspart from Malaysia and our bBevacizumab from India. It is important to note that the same facilities are already cGMP certified by other leading global regulators including EMA and Health Canada.
EMA has renewed the Certificates of GMP Compliance of our fully integrated manufacturing facilities in Bengaluru and Malaysia.
Till date, our facilities have received 80+ cGMP approvals from over 25 agencies, including the U.S. Food and Drug Administration and the European Medicines Agency.
These approvals reflect Biocon Biologics compliance with the highest international regulatory standards and unlock significant additional capacity to cater to the needs of patients as well as our pipeline products.
Biosimilars - FY24 Financial Performance:
Biocon Biologics crossed the USD 1 billion revenue mark with revenues from operations at 88,242 million, representing a strong 58% year-on-year growth driven by the acquisition and robust growth in the core business.
The business delivered 21,896 million in EBITDA representing a healthy margin of 25%. We also continued to invest in our pipeline to drive future growth with R&D at 10% of revenue for the fiscal year. These results highlight Biocon Biologics strong growth trajectory and we will continue to focus on delivering profitable, sustainable growth.
Reducing our acquisition debt remains a key priority and we are evaluating a range of options. In FY24 we were able to pay down USD 250 million in acquisition debt.
Biosimilars - FY25 Outlook:
In summary, FY24 saw Biocon Biologics cross the USD 1 billion revenue threshold and emerge as a unique, fully integrated, leading global biosimilars player.
Looking ahead, we remain focused on leveraging our vertically integrated model to accelerate growth for existing products while simultaneously expanding our geographical footprint and preparing for new product launches. These launches will be key catalysts in the short to medium term to drive sustainable and profitable growth.
Research Services (Syngene International Ltd.)
Syngene International Ltd. (Syngene) is a contract research, development, and manufacturing services company that provides an integrated range of scientific services from the earliest stages of discovery research to commercial manufacturing. This breadth of capabilities makes Syngene a one-stop solution provider for the global pharmaceutical, biotechnology, nutrition, animal health, consumer goods, and specialty chemical sectors. With more than 5,600 skilled scientists, advanced technological capabilities, and in-depth scientific expertise, Syngene is a trusted partner to more than 400 biopharmaceutical and pharmaceutical firms located mainly in the U.S., Europe, and the UK.
Operating out of campuses in Bengaluru, Mangaluru and Hyderabad, Syngene provides end-to-end services within the Contract Research Organization (CRO) where it operates at the leading edge of science and technology. It also offers a wide range of services within the Contract Development and Manufacturing Organization (CDMO), including commercial scale manufacturing for large and small molecules. It has flexible collaboration types ranging from contracts based on numbers of scientists (FTEs), fee for service, productivity-based and risk-reward models, as well as dedicated research facilities.
Contract Research Organization (CRO)
CRO Market:
Contract Research Organization (CROs) provides discovery research services to pharmaceutical, biotechnology, medical device, and other industries. The contract research industry has experienced rapid growth over the past decade with the pharmaceutical industry continuing to invest heavily in R&D, in order to develop innovative therapies that address unmet medical needs.
The global CRO market is expected to grow at a CAGR of 13% from USD 25 billion in 2023 to USD 46 billion in 202813. The growth of the CRO market is driven by factors such as increasing R&D activities in the pharmaceutical and biotechnology industries, rising demand for outsourced activities, and a growing trend towards strategic partnerships and collaborations.
FY24 was a challenging year for the research services industry as a whole as Biotech funding challenges in the U.S. impacted client spend for research services. However, biotech funding has shown an uptick in the January- March 2024 period with funding levels being the highest in the last 14 quarters and at similar levels to those in 2020/21. There is a time lag for the funding to be translated into demand so an uptick in research services is expected in the second half of FY25.
The pandemic and recent geopolitical events highlight the risks associated with relying on a single supply route. As a result, many companies are looking to build resilience in their supply chains by expanding and diversi- tying their suppliers to mitigate the risks. In addition, the geopolitical shifts are encouraging companies to consider outsourcing to countries like India. Considering these demand drivers for the CRO industry, we believe the long-term fundamentals of the industry are positive.
Our CRO Business:
Our CRO business comprises Discovery Services and Dedicated R&D Centers.
Discovery services span the entire spectrum of early-stage research from target identification to delivery of drug candidates for further development across small and large molecules. Syngenes flexible approach provides its clients with a choice of individual functional services or integrated drug discovery solutions. Functional services include chemistry, biology, safety assessment and toxicology, and computational and data sciences. Integrated Drug Discovery services - Synvent encompasses the functional domains with a program management approach across various stages of the drug discovery process.
Dedicated Centers are built on long term strategic partnerships, offering dedicated multi-disciplinary scientific teams, support personnel, and a tailormade ring-fenced infrastructure to support the clients R&D goals. Currently, Syngene operates dedicated R&D centers for three clients: Bristol- Myers Squibb, Baxter Inc., and Amgen Inc. These collaborations have shown steady growth and expansion in scope of engagement over the duration of the partnership.
The demand for CRO services was impacted in FY24 due to the slowdown in biotech funding and other macro factors. The Company is well positioned to navigate these challenges with continued focus on driving functional services and integrated drug discovery solutions. These are supported by investments in capabilities, technologies, and platform, according to the needs of clients. The Company continued to invest in its fully integrated therapeutic discovery and development for small molecules and biologics, SynVent, covering a range of therapeutic areas including oncology, gene therapy, central nervous system (CNS) and pain management for use in human and animal health. The Companys artificial intelligence-driven
programs continued to evolve. The capabilities of Syn.AI™ were expanded to enable it to identify the most effective drug targets for combating disease by enhancing its target identification and validation packages. In addition, in line with Syngenes commitment to innovation, the tool was applied to projects beyond life sciences for applications in the energy and cosmetic sectors. Planning for future growth, the Company acquired 17 acres of land in Genome Valley, Hyderabad, close to the current research campus.
In the Dedicated Centers, the Company will continue to focus on meeting the needs of its long-term strategic partners through investment in new capabilities and the continuous improvement in services.
Contract Development and Manufacturing Organization (CDMO)
CDMO Market:
CDMOs specialize in the development, scale-up and manufacturing of drug products both for clinical trials and commercial distribution. CDMOs offer a range of services that include drug development, process development, analytical testing, formulation development, scale-up, manufacturing, packaging, and distribution. These services can be provided on a standalone basis or as part of a complete end-to-end service offering.
The global CDMO (Small molecule + Large molecule) market was valued at ~USD 82 billion in 2023 and expected to grow at a CAGR of 15% to reach a market size of USD 165 billion by 202813. Like CROs, the growth in CDMOs is due to the increased outsourcing trend in the market currently.
A small molecule CDMO offers services which cover clinical to commercial scale development and manufacturing services of small molecules. The global small molecule CDMO market was ~USD 56 billion in the year 2023 and is expected to grow at a CAGR of15% to reach a market size of ~USD 112 billion by 202813. The expansion in the global small molecule drug discovery industry is a result of factors such as the increase in chronic diseases, increase in healthcare expenditure and upcoming patent expirations. Over the past few years, small molecule drugs have largely been leaders among the various drug types.
Services offered by a large molecule CDMOs can be divided into two areas: drug product (DP) development, which includes filling the drug substance into the primary container, and drug substance (DS) development, which includes the development of master and working cell banks, manufacturing process development and scale-up. The large molecule market size is currently estimated at USD 26 billion and is forecasted to grow at a CAGR of 15% to reach the market size of USD 53 billion by the year 202813. Even though the current market size of large molecules is approximately half of small molecules, the growth rate is higher. This can be attributed to a higher number of large molecule drug approvals, a rise in demand for novel therapeutics and increased capital investments by pharma companies, most notably in oncology. To accelerate the growth and launch of novel therapeutics, emerging biopharma companies are partnering with CDMOs to leverage their expertise in development, manufacturing, and navigating the path to market.
Our CDMO Business:
Our CDMO business offers Development services, including a range of preclinical drug substances and drug product development services for both small and large molecules. Our clinical development services are across Phase I, II & III trials. Manufacturing services completes the integrated platform offering to our customers. In addition to the small molecule commercial manufacturing facility in Mangaluru, the Company offers biologics manufacturing in Bengaluru, with the capacity to run multi-
product production campaigns simultaneously, based on a single-use technology platform.
The Companys strategy for Development Services is to leverage existing capabilities as an integrated Chemistry, Manufacturing, and Controls (CMC) solutions provider. In Manufacturing Services, the Company aims to capitalize on strong demand for biologics across clinical and commercial supplies by driving an integrated approach for development and manufacturing to provide a one stop-shop capability. For the small molecule commercial scale manufacturing, our Mangaluru facility received FDA approval which marks an important regulatory milestone for the facility .
Research Services (Syngene) - FY24 Highlights:
Acquisition of Biologics Manufacturing Facility from Stelis Pharma: We acquired a multi-modal biologics manufacturing facility from Stelis Biopharma Ltd for a gross value of 6,170 million. Once operational, 20,000 liters of biologics drug substance capacity will be added to Syngenes existing manufacturing capacity. It also includes a commercial scale, high speed, fill-finish unit, which is an essential capability for drug product manufacturing. The facility is expected to be operational in the second half of FY25.
Continued Investments in Capability and Capacity Building: During the year, we commissioned a state of the art, digitally enabled Quality Control Laboratory to support growing biologics operations. We also added a non-GMP capability center to meet market demand for agile, cost-efficient early phase development and scale-up services. In Discovery Services, operations in the Companys Hyderabad campus continued to grow with the commissioning of the centralized compound management facility, which will serve as a central storage facility for all compounds synthesized by Syngene.
To add to our capacity, we acquired land in Hyderabad to add future capacity in the research services business.
Another important area of focus was our supply chain where we took steps to increase supply resilience. We increased the number of suppliers we have outside of China, added more suppliers in India and introduced initiatives to improve our supplier ecosystem.
Research Services (Syngene) - FY24 Financial Performance:
Syngene generated operating revenues of 34,886 million, contributing to 23% of Biocons overall revenues and reflecting a growth of 9% over FY23, underpinned by strong performance in the development and manufacturing services business. Dedicated centers delivered at sustained pace while performance in discovery services impacted due to slowdown in biotech funding.
FY24 was driven by strong performance in CDMO business driven by commercial contract with Zoetis for production of Librela. The contribution to total Syngene Revenue from Research Services was at approx. 60% for the year compared to 65% in the previous year.
The consolidated financial performance of Syngene for FY24 is available in its Annual Report.
Research Services (Syngene) - FY25 Outlook:
FY24 was a challenging year for the research services industry as biotech funding challenges impacted client spending on research projects. We are encouraged by the recent step up in new funding into U.S. biotech and expect this to drive a recovery in demand for research services translating into revenue growth in the latter part of FY25. With increasing R&D spend and propensity to outsource, we believe that the long-term growth drivers for the industry are intact.
As demand picks up in the year ahead, we will continue to strategically invest in areas that strengthens our position as a leading integrated provider of research, development, and manufacturing services.
Financial Performance - An Overview
Consolidated Statement of Profit and Loss
The following table highlights key components of the statement of Profit and Loss for the fiscal years ended March 31, 2024 (FY24) and March 31, 2023 (FY23).
| Particulars | FY24 | FY23 | Change |
| Total income | 156,212 | 115,501 | 35% |
| Expenses | |||
| Cost of materials consumed | 48,979 | 36,631 | 34% |
| Employee benefit expense | 21,370 | 20,041 | 7% |
| Finance costs | 9,744 | 4,190 | 133% |
| Depreciation and amortisation expense | 15,688 | 11,131 | 41% |
| Research and development expenses, net of recovery partners | 11,540 | 11,194 | 3% |
| Other expenses (including overheads from Viatris biosimilar business) | 32,681 | 18,759 | 74% |
| Total expenses | 140,002 | 101,946 | 37% |
| Share of profit / (loss) of joint venture and associate (net) | (842) | (1,670) | |
| Profit before tax and exceptional item | 15,368 | 11,885 | 29% |
| Exceptional items, net | (116) | (2,914) | |
| Profit before tax | 15,252 | 8,971 | 70% |
| Tax expense | 2,308 | 1,763 | 31% |
| Tax on exceptional item | (34) | (293) | (88%) |
| Tax expense on adoption of new tax regime - exceptional | - | 1,071 | (100%) |
| Profit for the year | 12,978 | 6,430 | 102% |
| Non-controlling interest | 2,761 | 2,241 | 23% |
| Non-controlling interest on exceptional item | (8) | (438) | (98%) |
| Profit attributable to shareholders of the Company | 10,225 | 4,627 | 121% |
| Other comprehensive income attributable to shareholders | 2,688 | 1,138 | 136% |
| Total comprehensive income attributable to shareholders of the Company | 12,913 | 5,765 | 124% |
Viatris Biosimilars Business Integration
On November 29,2022, Biocon Biologics Limited (BBL) acquired control through two new subsidiaries over the Viatris biosimilar business. BBL had made an upfront payment of USD 2 billion and issued USD I billion of convertible securities to Viatris Inc. The balance amounts of USD 0.3 billion is payable on future dates as per the terms of the agreement. Consequently, full revenues and profits post-acquisition are reflected in the results for the current year and incremental revenues and profits post-acquisition are reflected in the results for the previous year.
Total Income:
During the year, Total income grew by 35% from 115,501 million to 156,212 million. Revenue from operations in Biosimilars and Research Services were up 58% and 9% respectively, while Generics grew by 1%. Our Total income number includes 5,307 millions of stake dilution and fair valuation gain in Bicara, pursuant to fund raise during the year.
Our Biosimilar revenues have increased by 58% over last year to 88,242 million, primarily due to Viatris biosimilar acquisition effective the consummation date representing a fully integrated enterprise and increase in the market shares of products in U.S., EU, and Emerging markets. Biosimilar revenues include onetime 3,500 million income from the divestment of the 2 noncore business units in India to Eris Lifesciences in the third quarter of the fiscal.
Generics revenues grew 1% to 27,985 million. The Formulations business saw encouraging growth, driven by new product launches, strengthening of our U.S. business footprint, further traction in our wider geographic expansion initiatives through both our direct-to-market and strategic partnership models. Momentum in our formulations business balanced the challenges we faced in pricing pressures in our API business, which witnessed a contraction over the year, resulting in Generics delivering modest year-on-year growth.
The Research services grew 9% at 34,886 million on strong performance in the CDMO business and further orders from existing clients reflecting high service levels and sustained on-time delivery. Dedicated centers delivered at sustained pace while performance in discovery services was impacted due to slowdown in the biotech funding environment.
The Total Income composition for FY24 and FY23 is detailed below:
| Particulars | FY24 | FY23 |
| ( million) | ( million) | |
| Generics | 27,985 | 27,644 |
| Biosimilars | 88,242 | 55,838 |
| Novel Biologics | - | 192 |
| Research Services | 34,886 | 31,929 |
| Inter-segment | (3,556) | (3,861) |
| Revenue from operations | 147,557 | 111,742 |
| Other income | 8,655 | 3,759 |
| Total income | 156,212 | 115,501 |
Cost of Material Costs Consumed
Material costs include raw materials, packing materials and change in inventories. In FY24, material costs, as a percentage of revenue from operations ex-licensing stood at 34%, up by 25 bps from FY23.
Employee Benefit Expense
Employee costs comprise of the following items:
• Salaries, wages, allowances, and bonuses
• Contributions to provident fund
• Contributions to gratuity
• Amortisation of employees stock compensation expenses and
• Employee welfare expenses including employee insurance.
These expenses increased by 7% in FY24, driven by business growth, increased headcount, and annual increments.
Interest and Finance Charges
The finance cost for FY24 increased to 9,744 million from 4,190 million in FY23 primarily due to the increase in interest costs related to the funds raised for Viatris biosimilar business acquisition.
Depreciation and Amortisation
During the fiscal, the depreciation and amortisation cost increased 41% to 15,688 million from 11,131 million in FY23 primarily due to amortisation of intangibles on Viatris biosimilar business acquisition and commissioning of new facilities across business verticals.
Research and Development Expenses
The net R&D expenditure for FY24 increased by 3% to 11,540 million (11,194 million in FY23). Net R&D was at 10% of revenue ex-Syngene. The R&D spend increased due to clinical advancement of generics and biosimilar development programs.
Other Expense
Other expenses comprise power and fuel costs, professional fees, overheads from Viatris biosimilar business, and other selling expenses such as freight outwards and general overheads. Other expenses for FY24 increased by 74% to 32,681 million (18,759 million in FY23). Other expenses as a percentage of revenue increased from 16% to 21% in FY24 driven by overheads on the Viatris business acquisition, integration costs and higher selling and other operating expenses.
Tax Expenses
The effective tax rate (ETR) for the year before the exceptional item and adoption of new tax regime was 15% similar to FY23. Effective FY23, the Company decided to adopt to the new tax regime notified u/s 115BAA of the Income Tax Act, 1961. Consequently, the Company has written off Minimum Alternate Tax (MAT) balance of ? 1,071 million in previous year, which can no longer be carried forward.
Exceptional Items (Net)
The Exceptional items include the following:
a) Syngene had entered into a binding term sheet for acquiring Unit 3 biologics manufacturing facility in Bengaluru, India, from Stelis Biopharma Limited (SBL) and incurred transaction costs 111 million in the year ended March 31,2024. Consequential tax impact of 31 million included in tax expense for the year ended March 31, 2024.
b) The Department of Pharmaceuticals (DOP), via Corrigendum dated October 20, 2023, has modified the PLI guidelines to limit the annual incentive allocation to each applicant for the first 4 years of the scheme. Pursuant to such guidelines, during the year ended March 31, 2024, the Group has reversed 166 million of excess PLI accrual made in the books for the year ended March 31, 2023. Consequential tax impact of 22 million is included in tax expense for the year ended March 31, 2024.
c) Biocon Biologics Limited (BBL) obtained services of professional experts (like advisory, legal counsel, valuation experts) for Viatris biosimilars business transaction. During the year, BBL recorded 1,582 million, as an expense with consequential tax of 80 million included within tax expense. Similarly, BBL recorded 2,374 million in the previous year with consequential tax impact of 231 million included within tax expense for the period.
d) One of the subsidiaries of BBL had received 18,269 million towards working capital under the existing arrangements. Receivables were recorded at fair value of 10,219 million having regard to the timing and probability of recovery. The resulting difference of 8,050 million is recorded as a gain. Consequential tax impact of 407 million is included within tax expense.
e) One of the subsidiaries of BBL, pursuant to the uncertainty of ability to commercialize a product for development and commercialization in certain territories, recorded an impairment of the carrying value of the intangible asset amounting to ?3,854 million.
f) One of the subsidiaries of BBL has recorded provision for inventory for a product due to its low demand and consequentially lower probability of liquation amounting to ?2,366 million. Consequential tax impact of ?296 million is included within tax expense.
g) Biocon Pharma Limited and its subsidiaries in Generics business pursuant to the uncertainty in commercialization of product in certain territories, recorded an impairment of the carrying value of the intangible asset amounting to ?91 million. Consequential tax impact of ?19 million is included within tax expense.
Other Comprehensive Income
Other comprehensive income includes re-measurement gains/losses on defined benefit plans, gains/losses on hedging instruments designated as cash flow hedges and exchange differences on translation of foreign operations, gains/losses on the fair value of the investment in equity through Fair Value through Other Comprehensive Income (FVOCI).
Consolidated Balance Sheet
The following table highlights the Consolidated Balance Sheet as on March 31,2024 (FY24) and March 31,2023 (FY23)
| ASSETS | Mar-24 | Mar-23 | Change |
| Tangible assets | 119,778 | 101,226 | 18,552 |
| Goodwill and intangible assets | 266,591 | 266,621 | (30) |
| Investment in associates and a joint venture | - | 1,378 | (1,378) |
| Inventories | 49,439 | 42,437 | 7,002 |
| Financial assets (other than cash and bank balances) | 75,150 | 49,485 | 25,665 |
| Cash and bank balances - A | 31,016 | 43,867 | (12,851) |
| Current and deferred tax | 7,302 | 6,553 | 749 |
| Other assets | 11,431 | 8,861 | 2,570 |
| 560,707 | 520,428 | 40,279 | |
| Equity and Liabilities | |||
| Equity | |||
| Share capital and other equity | 197,837 | 178,669 | 19,168 |
| Non-controlling interests | 54,911 | 46,219 | 8,692 |
| 252,748 | 224,888 | 27,860 | |
| Liabilities | |||
| Borrowings - B | 157,296 | 177,707 | (20,411) |
| Financial liabilities | 128,933 | 94,019 | 34,914 |
| Income tax and deferred tax liabilities | 6,684 | 6,068 | 616 |
| Provisions and other liabilities | 15,046 | 17,746 | (2,700) |
| 307,959 | 295,540 | 12,419 | |
| Total | 560,707 | 520,428 | 40,279 |
| Net Debt C= (B-A) | 126,280 | 133,840 | (7,560) |
Tangible Assets
Tangible assets grew 18%, primarily due to additions in Biosimilars facility in Malaysia and India, Generics immunosuppressant and peptides facility and in Research services, the acquisition of land in Hyderabad and acquisition of bio-manufacturing facility from Stelis, partly offset by depreciation during the year.
Goodwill and Intangible Assets
Goodwill and intangible assets are primarily on account of the acquisition of Viatris biosimilars business and intangibles under development in Biosimilars.
Investment in Associates and a Joint Venture
In FY24, Bicara raised funds through Series C financing from third parties resulting in dilution of interest and resulted in loss of significant influence over the investee. The Group has fair valued its investment on the date of loss of significant influence and recorded a resulting gain of ?4,254 million in the statement of profit and loss and disclosed under Other income.
Inventories
In inventory, increase is on account of business growth and build up towards new product launches in Generics, Biosimilars and Research services.
Financial Assets
Financial assets primarily include Trade and other receivables, derivative assets, and other financial assets. Increase is primarily due to business growth from the Viatris biosimilar business acquisition.
Other Assets
Other assets comprise of Balance with statutory / government authorities, capital and other supplier advances, prepayments. Increase is on account of PLI receivable and other balances with government authorities.
Share Capital and Other Equity
Other equity majorly comprises of securities premium, treasury shares, retained earnings, and further reserves. The Companys total other equity increased by 11% in FY24. Increase is mainly due to earnings for the year and issue of shares by Subsidiary.
Non-Controlling Interests
The profit attributable to minority shareholders increased due to current years profit accumulation and issue of shares by Subsidiary.
Borrowings
Total Borrowings stood at ? 157,296 million (March 31, 2023: ?177,707 million). During the year ended March 31, 2024, long-term borrowing of USD 250 million in the Biosimilars business has been repaid and mezzanine finance of USD 150 million in the Generics business has been settled through transfer of BBL shares held by BPL.
Other Financial Liabilities
Other financial liabilities primarily comprise ? 18,018 million of gross liability on written put options to enable investors of our subsidiary, Biocon Biologics Limited, to exit over a period of time and ?27,423 million of deferred compensation payable for Viatris acquisition. Further, it also includes trade and capital goods payables, lease, derivative liabilities, and other liabilities.
Provisions and Other Non-Current Liabilities
Provisions and other non-current liabilities primarily include deferred revenue, deferred tax liability and provision for gratuity and compensated absences.
| Key Financial Ratios | ||
| Particulars | FY24 | FY23 |
| Debtors days | 117 | 96 |
| Inventory days | 240 | 195 |
| Current ratio | 1.2 | 1.45 |
| Debt equity ratio | 0.8 | 1.0 |
| Operating profit margin (%)* | 27% | 25% |
| Net profit margin (%)* | 7% | 7% |
| Return on investmentA | 5% | 4% |
# Operating margin is defined as Profit before taxes, interest, and depreciation
* Net Profit before exceptional item and tax thereon
A Net Profit before exceptional income and tax thereon to average equity
Risks, Threats, and Concerns
Risk Management:
Organizations can create sustainable value for their stakeholders by effectively managing the risks which in case of its occurrence has a material impact on their business either financially or otherwise. Therefore, identifying, assessing, and effectively managing key risks that matter is critical from a Corporate Governance standpoint to enable an organization to attain its strategic objectives and protect the interest of its stakeholders.
Risk, as defined by ISO 31000:2018 (Risk Management - Principles and Guidelines), "is the effect of uncertainty on objectives". A risk is a potential event or non-event, the occurrence or non-occurrence of which can adversely affect the objectives or strategy of the company or result in opportunities being missed. Risk is measured in terms of likelihood of occurrence and potential impact if it materializes. Risks can be categorized as Strategic, Regulatory and Statutory, Sectoral, Information technology, Catastrophic, Executional/ Operational, and Sustainability (ESG).
Enterprise Risk Management (ERM) is an integrated approach to proactively managing risks which affect the achievement of vision, mission, and objectives. Risk management does not aim at eliminating the risks, as that would simultaneously eliminate all chances of rewards/ opportunities. Risk Management is instead focused on ensuring that these risks are known and addressed through a pragmatic and effective risk management process.
At Biocon Limited we follow a robust Risk Management framework that ensures business operations continue uninterrupted. The key objectives are:
¦ Better understand the Companys risk profile.
¦ Increased certainty and fewer surprises.
¦ Ensure that the Executive Leadership team can make informed business decisions based on risk assessment.
¦ Sound business opportunities are identified and pursued without exposing the business to an unacceptable level of risk.
¦ Contribute to safeguard Company value and interest of shareholders.
¦ Improve compliance with good corporate governance guidelines and practices as well as laws and regulations.
Our Risk Management Process:
Once a risk is identified, there are four different ways in which a risk can be handled - Treat, Terminate, Transfer, Take. At Biocon, a responsive action plan is initiated for treating or managing the key risks identified and bringing them to a tolerable level.
The risk management process at Biocon involves the following three steps:
1. Risk Identification and Assessment
2. Risk Prioritization
3. Risk Mitigation
4. Risk Monitoring and Reporting
The organizations risks are identified, assessed, and prioritized on a periodic basis. The risk monitoring and reporting process aims to provide assurance to the Management that risks have been adequately identified, assessed, prioritized based on its impact on business and the likelihood of occurrence, and mitigation strategies put in place for the key risks, which are being regularly monitored for their effectiveness. The Risk Management Committee reviews the key risks that matter with respect to their gross exposure, mitigation action status, and net exposure periodically.
Our Risk Management Structure:
Biocon Limiteds Board of Directors has direct oversight over the Companys overall risk management framework. The Board has formed a Risk Management Committee which reviews key existing and emerging risks, monitors the adequacy of de-risking strategies as well as the progress on implementing such strategies. The Risk Management Committee, which comprises of the Chairperson, Managing Director and CEO and Independent Directors, meets once every quarter, and invites senior business leaders, who are essential to the discussions, to these meetings.
An enterprise-wide risk evaluation and validation process is conducted regularly and reviewed by the Risk Management Committee and the Board of Directors. The three lines of defense model lays out clear risk management responsibilities and accountabilities to ensure a companys risk-related objectives are achieved. In this model, the first line i.e., Departments/ Functions (risk owners, risk managers and business unit heads) are responsible for executing and implementing the risk management initiatives set and assigned by the second line; the second line i.e., the Risk Management Committee and Executive Leadership Team with the support of Chief Risk Officer establishes the framework sets approach, provides direction and monitors risk management activities. The third line i.e., the internal audit/ Governance, Risk, and Compliance (GRC) team or an external auditor, provides independent assurance that organizational practices are aligned with the companys risk strategy and policies, as implemented by the first and second lines.
Collaboration: With time, the practice of risk management has shifted in a fundamental way. In the past, risks were managed in "silos". Over time, risk management framework recognized that risks, by their nature, are highly interconnected and interdependent. This evolved approach views all risks together, within a coordinated and strategic framework, which is integrated throughout the organization cutting across functions. To formalize and communicate its approach to risk management, the Company has put in place an enterprise-wide Risk Management Framework. This holistic approach provides the assurance that, to the best of its capabilities, the Company and all its business units identify, assess, and mitigate risks that could materially impact its performance in achieving the stated objectives. Our Chief Risk Officer works closely with all key functional heads who are the Risk and Mitigation plan owners.
Our integrated approach to risk management encompasses both business risks and ESG-related risks. This comprehensive view acknowledges the interconnected nature of risks across the Company, its stakeholders. and the value chain.
Our risk universe covers the entire gamut of risk exposure categorized under Sectoral, Strategic, Information Technology, Catastrophic, ESG/ Sustainability, Regulatory and Statutory, and Executional/ Operational risks. From this risk library the key risks that matter is arrived at based on high impact on business and high likelihood of occurrence. For the key risks that matter, mitigation strategies are developed, implemented, and assessed on a periodic basis.
Risk Culture: To strengthen the risk culture across the Organization, we undertake awareness programs with relevant stakeholders to educate them on the significance of risk management and encourage a culture of constant feedback to drive continuous improvement in our risk management systems and processes.
Key Business Risks and Opportunities:
Our established risk management framework addresses risks that are inherent to the pharma business and any others that may impact our strategic goals. The following summary indicates some of our key risks and mitigation measures drawn from management reviews and deliberations with the Risk Management Committee:
| # Risk | Description | Mitigation Actions in Place |
| 1 Research and Development Risk | Challenges in selection of differentiated product portfolio, major deviations from projected revenues, and delays in achieving target launch dates and/ or project cost overruns. | Loss of exclusivity focused product universe screening and pro-active evaluation of databases and screening of innovator pipeline. |
| Comprehensive review by the leadership team of portfolio strategy and new products selection. | ||
| Use of digital and innovative solutions to increase the efficiency of R&D operations and reduce development costs. | ||
| Internal alignment on execution amongst cross functional teams. | ||
| Continuous program monitoring to avoid potential delays. | ||
| Proactive interaction with regulators to secure timely inputs. | ||
| Explore application of AI/ ML in process development. |
*ESG Opportunity (Social & Environment, i.e. Access & Affordability, & Responsible Investments, Green Initiatives): Innovation led technologies to bring in efficiencies and cost savings, lessen environmental impact and enhance performance, and also increase accessibility and affordability to healthcare.. Strategies:
¦ Roadmap for innovation put in place to apply Bio-Transformation pathways such as Green Chemistry and develop own enzymes..
¦ Established a Lifecycle Assessment (LCA) framework for API synthesis process by comparing environmental impact of enzymatic and chemical route of synthesis. The enzymatic step identified major hotspots, which can be further used for identifying alternate materials with less environmental impact.
| # Risk | Description | Mitigation Actions in Place |
| 2 Regulatory Compliance Risk (ESG Risk - Social i.e. Product Quality) | Regulatory observations resulting in plant shutdown (Existing products/ Mfg.). | Process automation and simplification to reduce manual errors. |
| Digital initiatives such as Learning Management system, Quality management system, Document management system, Scientific document management system, Laboratory information management system, cleaning validation, eGxP Inventory etc. | ||
| Improved quality and speak up culture. | ||
| Continuous knowledge enhancement of the personnel (training) | ||
| Strengthen and timely completion of investigation and root cause analysis. | ||
| Adequate and timely CAPA implementation. | ||
| Upgrade to infrastructural requirements. | ||
| 3 Product Quality Risk | Delay in achieving QC service level agreements or QC inefficiencies impacting productivity and development projects. | Collaboration: Cross-functional team (CFT) integrated working and operational excellence. Regular CFT meeting continues to happen for discussing quality related issues, mitigation plans, etc. |
| Focused Group Discussions with CEO in place to discuss on quality strategy, various updates, and address escalations. | ||
| Regular shop floor visit by Quality/ Operations leaders to understand issues and suggest practical solutions. | ||
| Operational excellence initiatives being implemented to reduce testing by QC or increased efficiency. | ||
| Close monitoring to achieve SLAs for QC activities. | ||
| Relook at the current QC processes for simplification and harmonization. Introduction of QC planner (e.g., materials upcoming for testing) to prioritize activities. | ||
| Centralization of analytical work (e.g., analytical method validation) to reduce duplication of QC efforts. | ||
| 4 Human Capital Risk | Challenges noted in retaining high potential / critical resources in niche areas. | To promote internal talent mobility, various growth and development opportunities have been initiated. |
| Industry benchmarking of employee compensation is being carried out. | ||
| Apprentices onboarded to reduce workload and create pipeline for talent pool. | ||
| Enhanced connects with HRBPs, buddy programs and other initiatives for employee engagement. | ||
| Rewards & Recognition programs to recognize achievements and talent. | ||
| Success planning for future leaders. |
*ESG Opportunity (Social i.e., Diversity and Inclusion): Efforts have been made to improve diversity in the workplace through interventions across recruitment at functional level. We recognize the potential of a diverse and inclusive workforce in driving innovation, bringing fresh perspectives for long term value creation.
*ESG Opportunity (Social i.e., Responsible): Establishing engagement with local communities is vital for the Biocon Group to promote trust, stronger relationships with local communities, improved brand reputation and enhanced social responsibility. Further, the Biocon Group can prevent potential grievances or concerns, protecting its business interests from adverse events. Through the Biocon Foundation, diversified social impact interventions, including employee volunteering activities, have been developed and implemented that drive engagement within communities that we operate in.
| # Risk | Description | Mitigation Actions in Place |
| 5 Commercial/ Pricing Risk | Adverse Impact of the legislative changes on the growth of the business. (e.g. IRA, TAA, localization requirements, etc.). | A robust assessment of the upcoming policy changes, executing COGS reduction programs and managing timely launch of products. |
| Pricing pressure impacting revenue, growth, and plant utilization. | Long-term contracts for key products in place. | |
| New customers identified for lock-in of key products. Increase in customer base by qualifying customers in areas where pricing is marginally better. | ||
| Implementation of high impact Cost Improvement Programs (CIPs). | ||
| New technologies are being explored to drive long-term cost reduction. | ||
| Geographic diversification into MoW markets. | ||
| *ESG Opportunity (Social | i.e., Affordability and Availability of Health Products): Implementing responsible pricing strategies for innovative and generic medicines, which consider affordability, positive cost-benefit ratio and reduction of overall healthcare costs can significantly enhance reach among patients relative to Biocons competitors, increase customer loyalty and improve our brand reputation, leading to sustained revenue growth and profitability. This is also in line with our four strategic pillars of Accessibility, Affordability, Availability and Assurance. | |
| 6 Risk of Lag in Growth | Adverse Impact of the legislative changes on the growth of the business. (e.g. IRA, TAA, Localization requirements, etc.). | Localize manufacturing as per country specific requirements where we operate. |
| A strategic partnership with customers is being established to improve capacity utilization. | ||
| Slower customer lock-in for new facilities/ Delay in regional expansion. | ||
| Before entering into any new market, a comprehensive landscape analysis is performed covering the competition and other market dynamics. | ||
| Continuous evaluation of new product launches in existing markets and entry into new markets. | ||
| Significant progress made on Lock-in of new customers. | ||
| Build partnerships with strategic regional players. | ||
| 7 Single Source Risk (ESG Risk - Social i.e. Product Availability) | Dependency on single region and single vendor for sourcing of input materials. | Focused alternate vendor development to reduce dependence on any specific country or single source for procurement of key materials. |
| Building strategic inventory to address any unanticipated disruption in supply. | ||
| Where alternate vendors are not available, mitigation actions such as planned inventory buildup, supply contracts etc., are considered. | ||
| 8 Information and Cyber Security Risk | Having appropriate cyber and information security controls will reduce the probability of loss of critical information or any external cyber-attack. | Established Security Operations Center and Cyber Defense Center to proactively and effectively manage security requirements or incidents. |
| Robust incident monitoring and response measures. | ||
| Measures in place to identify and prevent phishing attacks. | ||
| Continuous effort to increase employee awareness on information and cyber security. | ||
| Periodic vulnerability assessments and implementation of actions to address gaps. | ||
| 9 Health and Safety Risk (ESG Risk - Social i.e., Safety) | Process Safety and Health risk can potentially lead to disruption of operations or health impact for personnel or cause reputational damage. | Framework to ensure continuous compliance of environment, health and safety (EHS) requirements. Implemented risk-based process safety management at sites. |
| Process safety risk register implemented to monitor safety risk. | ||
| ISO 45001 (Occupational Safety) audit completed for all sites; no major non-conformances were reported. | ||
| Focus on workforce awareness as well as enhanced safety infrastructure. | ||
| Various mitigation measures and constant monitoring ensure that the probability of risk occurrence is minimized. | ||
| Steps are in place to ensure zero-accident safety through defined procedures, trainings, internal audits, etc. | ||
| 10 Statutory Compliance Risks | Continuous compliance to the law of the land will prevent penalties and loss of reputation. | Process to independently track and ensure compliance of various statutory requirements. |
| Timely identification of compliance changes and assessment of their applicability. | ||
| Technical support is sought as appropriate, including from external experts. | ||
| 11 Project/ Capital Investment Risk | Project delays/ cost escalations impacting product launch, supply and ROI. | Periodic meetings with leadership team on project progress, escalations, risks, decisions required etc. |
| Business risk management methodology in place to identify, track and monitor the detailed list of risks impacting each project. | ||
| Budget is tracked at a granular level and analyzed appropriately. | ||
| A project scope change control (PSCR) mechanism is put in place to avoid cost escalations/ delays. | ||
| 12 Sustainability Risks/ Climate Change Risk (ESG Risk - Environment i.e., Climate) | Climate change risks (global risk) impacting overall value chain (long term risk). | ISO 14001 (Environmental Management) audit completed for all sites and no major non-conformances were reported. |
| Measure in place for focusing on use of more renewable power, use of bio-mass briquettes, instead of coal and use of energy efficient cooling mediums to address climate risk. | ||
| Continuous efforts to address sustainability risk will help to reduce probability of any external events impacting business continuity or value chain. | ||
| Measures in place for better water, reduce water usage and increase recycled water usage. | ||
| Waste is disposed for treatment only as per the government norms for reuse or recycling. | ||
| 13 Ethical and Effective Governance Risk (ESG Risk - Governance) | Inadequate or ineffective control systems may weaken Governance mechanism. | Employee and Supplier code of conduct, Anti-bribery Anti-corruption (ABAC) policies put in place. Principles of integrity, transparency, accountability, and ethics are imbibed in organization culture. |
| The authority matrix is in place for key business transactions which is adhered to always. | ||
| Policies and SOPs are put in place for all business processes which are followed diligently. | ||
| Internal controls are defined across key business processes with financial and operational impact and a periodic self-certification process is put in place to affix responsibility and accountability and build a strong culture. | ||
| Further, internal audit reviews ensure adherence to key control activities and keep check on mitigation effectiveness. | ||
| # Risk | Description | Mitigation Actions in Place |
| 14 Financial Risk | Biocon Limiteds obligation to provide exit to BBL investors in case of IPO/ no- IPO scenarios, coupled with shortfall in BBL EBITDA impacting group covenants. | Group has raised additional funds in Q1 FY24 at similar valuation to the fund raise in Q4 FY23. |
| Debt covenants at BL and BBL are compliant based on current EBIDTA to Net debt. | ||
| Group ability to re-negotiate with the investors for deferring the exit terms, raise funds or to support liquidity from its assets. | ||
| Amendments to borrowing arrangements providing relief with covenant compliance for BBL through equity support undertaking. | ||
| Groups ability to utilize working capital limits / capex limits to refinance its borrowings when these fall due. |
A keen eye to identify and understand Significant Emerging Risks and Opportunities is also placed from time to time. This enables the company to manage these risks and safeguard our business proactively.
Currently the Generics industry faces two opposing forces that complicate profitability and growth. While demand for generics continues to increase globally and there will be an increase in number of blockbusters and other small molecule drugs going off-patent globally in next 5 years, buyers consolidation/ consortia may further add to the existing price pressure and limit generics manufacturers pricing power, reduce profitability and force to exit markets.
Another emerging risk is data management and requirements from Digital Personal Data Protection Act (DPDPA), which we will continue to evaluate based on changing dynamics of the regulation and the business.
Geopolitical risks include the collapse of a multilateral institution, interstate conflicts, terrorist attacks, etc. Any occurrence of this nature has the potential to severely disrupt our operations along with irreparable damage to life, access to medicines, livelihood and the ecosystem. Consistent monitoring of the regional policies and statutes in different countries where our products are marketed and sold is undertaken to ensure compliance.
An early alert to such risk events and scenarios provides us the ability to plan, prepare and respond against adverse impact and based on the assessment, it will be taken either as a placeholder in our risk library or if rated high, included in the key risks that matter for mitigation and monitoring.
Further, advanced technologies such as Artificial Intelligence, Augmented reality and Virtual reality, Genetics and genomics, wearables and sensors, Cloud and edge computing can be explored to expedite R&D process and make it cost competitive.
Our way forward plan is to further embed these risk management practices into the wider organization, by taking measures to educate and incentivize employees at all levels of the business, thereby nurturing a strong and effective risk culture. Creating a strong risk culture is important for integrating risk
processes, procedures, and employee awareness throughout the organiza-
tion. Such an approach ensures risk management is not just a compliance exercise but a fundamental part of the companys operational mindset.
Internal Controls
The Company has laid down guidelines, processes, and structures, which enable implementation of appropriate internal control systems commensurate with the business requirements, scale of operations and applicable statutes. Such internal financial controls encompass policies, processes and key activities or procedures adopted by the Company for ensuring the orderly and efficient conduct of business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information. These include controls in the nature of manual or automated (IT applications including the ERP applications wherein the transactions are approved and recorded).
The Company is staffed by experienced, qualified professionals who play an important role in designing, implementing, maintaining, and monitoring our internal control systems. Appropriate review and self-certification mechanisms have been put in place to ensure that such control systems are adequate and are operating effectively on an ongoing basis.
The Corporate Internal Audit team is an independent assurance and advisory function, responsible for evaluating and improving the effectiveness of controls, risk management practices and governance processes. The internal audit team helps to enhance and protect organizational value by providing risk-based objective assurance, advice and insights. The internal audit team prepares annual audit plans based on risk assessment, which are approved by the Audit Committee of the Board. The Head of Internal Audit presents an update on a quarterly basis to the Audit Committee.
Periodic independent audits are carried out to provide reasonable assurance of internal control effectiveness and to benchmark on industry-wide best practices. The Audit Committee, consisting of Independent Directors, reviews important issues raised by the auditors regularly, alongside the remediation actions to ensure the control environment stays strong and risks are mitigated appropriately on a timely basis.
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