Biocon’s moment of reckoning

With biosimilars in the limelight, Kiran Mazumdar-Shaw’s company is poised to become one of India’s most important drug makers

Kiran Mazumdar-Shaw’s business was the first to launch several copies of complex drugs to fight cancer in India, and fight off multinationals like Novo Nordisk and Elli Lilly by forcing them to reduce prices on their diabetes medicines. But none of those strong business actions have ever reflected in the valuation of her company.

Biocon’s valuation stagnated at about a billion dollars for a decade after its 2004 initial public offer. While several Indian pharmaceutical firms like Sun Pharma, Dr Reddy’s Laboratories and Lupin made a splash overseas, Biocon remained relatively unknown and, frankly, not very well understood by analysts and the market.

But this may be about to change. Over the last three years, the Biocon stock has inched up and is now India’s fifth-most valuable pharmaceutical company. At the core of its rise is the biologics business.

Half the top 10 drugs by sales in the world are biologics, or drugs developed from biological materials, as against chemical drugs. Clones of biologics are called biosimilars, which is where Biocon excels. Its subsidiary Biocon Biologics is the only Indian company that has permission from the US Food and Drug Authority to sell biosimilars in the world’s biggest pharma market. It also has permission to sell biosimilars in Europe, Japan and Australia. The US market for, say, insulin products alone is worth $60 billion.

With the global market for biosimilars growing far faster than that of generics, the traditional mainstay of Indian pharma, can Mazumdar-Shaw turn Biocon into India’s most important—and most valuable—pharmaceutical company? Read on.

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