Biocon Biologics buys Viatris’ biosimilars business in $3.3 bln deal; Mazumdar-Shaw to continue as chairperson

Biocon Biologics Ltd (BBL), a unit of BSE-listed Biocon Ltd, said Monday it has agreed to acquire biosimilar business from US-based healthcare firm Viatris Inc for $3.335 billion in stock and cash. Nasdaq-listed Viatris will receive up to $2.335 billion and compulsorily convertible preference shares worth $1 billion or equivalent equity stake of 12.9% in Biocon Biologics, the company said in a filing to the stock exchange.

Kiran Mazumdar-Shaw, founder and executive chairperson of Biocon, said the deal will enable BBL (Biocon Biologics Ltd) in expanding to developed markets of the United States and Europe and to fast-track the company’s journey to build Biocon into a global brand. Following the deal, Mazumdar-Shaw will continue to be the executive chairperson of BBL and Viatris will designate Rajiv Malik, president of Viatris, to serve on the company’s board.

The deal, which is expected to be value accretive for the company, has been approved by the board of directors of both companies. It will accelerate BBL’s direct commercialization strategy for its current and future biosimilars portfolio. The cash payment of $2 billion to Viatris will be funded by $800 million raised through equity infusion in BBL and the remainder to be funded by debt, additional equity or a combination thereof.

“It (the deal) will also make us future-ready for the next wave of products. This development takes our partnership with Viatris to the next level to realize our shared purpose of impacting global health by providing affordable access to high quality essential and life -saving Biosimilar drugs,” Mazumdar-Shaw said.

A biosimilar, akin to its name, is a copy of an existing biologic drug. It is a drug made from proteins or pieces of proteins. As patents of several successful biologic drugs have expired and a number of blockbuster drugs are further expected to lose patent protection in the coming years, the biosimilars market is expected to benefit from this opportunity, according to a research report from Research and Markets. The biosimilar market reached a value of $ 13 billion in 2021.

“This transaction will allow Viatris to continue to participate in the global biosimilars space in a more optimized way, while also allowing us to accelerate our own financial priorities,” Robert J. Coury, the executive chairman of Viatris said.

Alongside access to global markets, the deal with Viatris, which has been a partner of Biocon for about ten years, will expand its existing arrangement. According to the statement, Biocon will gain Viatris’ global biosimilars business, whose revenues are estimated to be $1 billion next year, along with its portfolio of its licensed biosimilar assets.