A turnaround for Biocon likely post Semglee launch

The sales ramp-up of three biosimilars launched by Biocon in the US was watched eagerly by investors. Note that competition has intensified, posing challenges in terms of gaining market share. Even in the two launched products, Pegfilgrastim and Trastuzumab, analysts at Axis Securities Ltd said competitors such as Amgen, Sandoz, Pfizer and Genentech are slashing prices to maintain market share.

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The upshot is that the biosimilars business could face price erosion in the second half of FY22. In this context, the launch of interchangeable Semglee may help shift the prescription share from leader Lantus. Analysts at HSBC Securities and Capital Markets (India) Pvt. Ltd said: “We believe Semglee could potentially turn around results for Biocon’s biosimilars efforts in the US where we have seen moderate market uptake for the three launched products.”

Meanwhile, the Street is also eyeing approval for the launch of oncology biosimilar Avastin. Biocon’s foray into the vaccine segment through a strategic tie-up with the Serum Institute of India, though in the initial stage, is also a positive.

The firm has also been doing well in the research services segment. In Q2, the research services clocked 17% year-on-year (y-o-y) growth in revenues, contributing to a third of the total revenue. Biosimilars that contributed 39% to overall revenues grew 10% y-o-y.

Notwithstanding the positives, analysts are not willing to boost earnings estimates, considering the persistent pricing pressure in generics and raw material price increases.