Biocon’s unit buys biosimilar assets of Viatris for $3.34 billion
PremiumBiocon Biologics estimates it will gain access to Viatris’ global biosimilars business that is expected to hit $1 bn in revenue next year
Biocon Biologics Ltd, a unit of Biocon Ltd, on Monday, said it has agreed to acquire the biosimilar assets of its partner Viatris Inc. for $3.34 billion in cash and stocks, a move that will give the Indian company access to developed markets in North America and Europe.
Viatris will receive $2 billion in cash on the deal’s closing and up to $335 million in additional payments in 2024, according to the terms of the agreement. In addition, once the transaction is closed, Biocon Biologics will issue $1 billion of compulsorily convertible preference shares to Viatris, equivalent to an equity stake of at least 12.9% in the company on a fully diluted basis, the company said in a statement. The transaction is expected to close by the second half of 2022.
Shares of parent Biocon plunged 11.47% on Monday after the announcement as investors baulked at the debt-funded plan. The stock ended trading on Monday at ₹348.95 on BSE.
According to the agreement, Viatris will provide Biocon Biologics with certain transition services, including commercialization services, for two years. Viatris will also pay $50 million to Biocon Biologics to fund capital expenditures.
Biocon Biologics estimates that it will gain access to Viatris’ global biosimilars business that is expected to hit $1 billion in revenue next year. The global biosimilars business of Viatris has an estimated revenue of $875 million and an operating profit of about $200 million.
Rajiv Malik, president of Viatris, will join the board of Biocon Biologics.
“The deal will enable Biocon Biologics to attain a robust commercial engine in the developed markets of the US and Europe and will fast-track our journey of building a strong global brand," said Kiran Mazumdar Shaw, executive chairperson of Biocon Biologics.
Through this transaction, Biocon Biologics will also gain access to a portfolio of biosimilars in therapy areas of insulin, oncology and immunology. Besides, it will also help Biocon Biologics strengthen its vaccine business through a partnership with the Serum Institute of India, which it announced last year.
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The funding for the cash portion of the transaction will be through $800 million raised through equity infusion into Biocon Biologics and the remaining through a combination of debt and equity.
Biocon said it received expressions of interest from financial institutions for debt financing and equity commitments from existing shareholders.
On the rationale for the transaction, Biocon Biologics said this transaction will expand its profit margins and “strengthen overall financials, enabling investments for sustained long-term growth."
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