Biotechnology major Biocon has reported a two-fold jump in its consolidated net profit to Rs 249 crore for the quarter ended March 31, compared to the year-ago period, mainly on account of a one-time exceptional income of Rs 202 crore.
The exceptional income is thanks to the settlement fee, global pharmaceutical major Pfizer has paid out when a deal to commercialise Biocon's insulin drugs was called off during the middle of the last financial year. Revenues rose about four per cent to Rs 649 crore.
In addition to this one-time fee, Biocon received a $20 million one-time inflow during the past quarter from its partner, Mylan, as both companies expanded the scope of partnership to incorporate generic insulin analogs. Mylan replaced Pfizer as partner to commercialise a suite of insulin products being developed by Biocon.
Without the exceptional income, net profit is down by more than half, owing to bonuses paid out, increase in R&D expenses, spike in tax payout and absence of licence development fee of Rs 46 crore, which had flown in during the fourth quarter of FY12. Given the rise in parameters of expenditure, the operating profits fell 21 per cent to Rs 124 crore.
Explaining the one-time exceptional income, Biocon said it does not have continuing obligations for clinical trials and development activities for biosimilar insulin analogs as part of the now-annulled pact with Pfizer. Accordingly, based on an allocation in proportion of the estimated future development spends on these programmes, Rs 215.04 crore allocated to them has been recognised as an exceptional income in the consolidated statement.
On a full-year basis, Biocon's net profit has surged 51 per cent to Rs 509 crore on revenues of Rs 2,538 crore, which grew 18 per cent, while the operating profit grew by 3 per cent to Rs 596 crore.
Commenting on the results, Biocon's CMD Kiran Mazumdar-Shaw stated: "The key contributors to growth this fiscal have been research services, branded formulations and our growing biosimilar business, led by generic Insulins. Biocon's Insulin franchise continues to garner market share across India and emerging markets and now accounts for over 10 per cent of our sales."
This quarter saw us enhance our partnership with Mylan through the re-licensing of our portfolio of generic insulin analogs. The partnership with Mylan endorses the intrinsic value of this asset and significantly reduces our burden of development costs involved in global commercialisation. Looking ahead, we intend to sustain our growth momentum by optimising our small molecules portfolio, further expanding our insulin footprint in emerging markets, and continuing to deliver robust growth in Branded Formulations and Research Services."
The company has added that the emphasis in FY14 will be on the execution of development plans for the generic biologics portfolio with a firm a leash on costs and portfolio margins. "We expect our R&D costs to increase in line with the progress being made by our generic biologics and novel molecules. Revenues should keep pace with the increasing R&D investments as we gain further traction in emerging markets this fiscal. We intend to further optimise our small molecules portfolio to ensure healthy margins. Our Malaysian facility continues to advance and is poised to come on stream by FY15," Shaw added.
Biocon's shares on Friday lost 3.6 per cent and closed at Rs 278.85 apiece on the National Stock Exchange.