New Delhi, Feb 28 (PTI) In one of the largest deals in the pharma and healthcare space, Biocon on Monday said its subsidiary Biocon Biologics will acquire Viatris Inc’s biosimilars business for up to USD 3.33 billion (about Rs 24,990 crore).
Biocon Biologics has entered into a definitive agreement with Viatris Inc to acquire its biosimilars business to create a fully integrated global biosimilars enterprise, Biocon Ltd said in a statement on Monday.
Viatris will receive consideration of up to USD 3.335 billion, including cash up to USD 2.335 billion and Compulsorily Convertible Preference Shares (CCPS) in Biocon Biologics Ltd valued at USD 1 billion, it added.
Biocon said Viatris will receive cash consideration of USD 2 billion on the closing of the transaction and up to USD 335 million as additional payments expected to be paid in 2024.
Additionally, upon closing of the transaction, Biocon Biologics will issue USD 1 billion of CCPS to Viatris, equivalent to an equity stake of at least 12.9 per cent in the company, on a fully diluted basis.
As part of the deal, Biocon Biologics will gain Viatris’ global biosimilars business whose revenues are estimated to be USD 1 billion next year along with its portfolio of in-licensed biosimilar assets.
The acquisition will help the company to have a comprehensive portfolio, comprising its current range of commercialised insulins, oncology and immunology biosimilars as well as several other biosimilar assets under development.
Biocon Biologics, which currently has a portfolio of 20 biosimilars, will also have access to the vaccine portfolio through its previously announced partnership with Serum Institute Life Sciences (SILS).
The Boards of Directors of both the companies have approved the transaction and the deal is expected to close in the second half of the year.
“This acquisition is transformational and will create a unique fully integrated, world-leading biosimilars enterprise. Our long-standing global partnership with Viatris has enabled us to achieve many firsts, setting new benchmarks for the global biosimilars industry.
“This strategic combination brings together the complementary capabilities and strengths of both partners and prepares us for the next decade of value creation for all our stakeholders,” Biocon Biologics Executive Chairperson Kiran Mazumdar-Shaw said.
The deal will enable Biocon Biologics to attain a robust commercial engine in the developed markets of the US and Europe, and fast-track Biocon’s journey of building a strong global brand, she added.
“It will also make us future-ready for the next wave of products. This development takes our partnership with Viatris to the next level to realise our shared purpose of impacting global health by providing affordable access to high-quality essential and life-saving biosimilar drugs,” Mazumdar-Shaw noted.
In an online press briefing, she noted that the deal would be value accretive to Biocon and its shareholders.
“Post closure of this deal, Biocon Biologics will realise the full revenue and associated profits from its partner products, which is a step up from the existing arrangement of realising a smaller fraction of the economic benefits of this partnership.
“It will just expand our EBITDA base and strengthen overall financials enabling us to invest in sustained long term growth,” Mazumdar-Shaw said.
According to her, the company is focused on the importance of vertical integration in the biosimilars industry to be agile and competitive. “Thus far we relied on the complementary capabilities of Viatris and Biocon biologics to provide vertical integration. As the biosimilar industry matures, a fully integrated model will become increasingly important for companies to drive sustainable growth”.
Mazumdar-Shaw also noted that the acquisition will make Biocon Biologics a unique global vertically integrated biosimilars leader.
She noted that the cash payment of USD 2 billion will be funded through a combination of equity infusion in Biocon Biologics as well as debt.
“The future considerations will be primarily funded from the cash generated in the business. The debt assumed that this transaction will be well supported by the larger EBITDA base, a combination of Biocon Biologics, Viatris and vaccine income streams and future equity infusions including IPO,” Mazumdar-Shaw stated.
Biocon Biologics Managing Director Arun Chandavarkar said the deal gives the company full ownership of Viatris’ rights in biosimilars assets, enabling it to recognise combined revenues and profits.
“This deal provides several advantages, including strategic agility and operational efficiencies, which will help us mitigate pricing pressures in a competitive global biosimilars landscape. We remain committed to sustainable growth with a strong financial profile, expanded geographical reach and continued investments in R&D to build a world-leading biosimilars franchise,” he added.
Viatris Executive Chairman Robert J Coury said: “Our unique collaboration with Biocon began more than a decade ago, even before a biosimilars pathway was defined in most countries. During that time, we have experienced many successes, and today is no exception as we join together to create a new, uniquely positioned world-class vertically integrated biosimilars leader”.
This transaction will allow Viatris to continue to participate in the global biosimilars space in a more optimised way while also allowing us to accelerate its own financial priorities, he added.
As part of the deal, Mazumdar-Shaw would continue as Executive Chairperson of Biocon Biologics while Viatris would designate Rajiv Malik, President of Viatris, to serve on the Biocon Biologics board.
The companies will also enter into a transition services agreement, pursuant to which Viatris will provide certain transition services, including commercialisation services, for an expected two-year period.
Viatris also will pay USD 50 million to Biocon Biologics to fund certain capital expenditures.
The Bengaluru-based company said the cash payment of USD 2 billion would be funded by USD 800 million raised through equity infusion in Biocon Biologics and the remainder to be funded by debt, additional equity or a combination thereof.
Biocon Biologics has received expressions of interest from financial institutions for debt financing and equity commitments from existing shareholders, it added.
Viatris was formed in 2020 through the combination of Mylan and Upjohn, a legacy division of Pfizer.
The company employs around 38,000 people and has presence across North America, Europe, the Asia Pacific region and emerging markets.
Viatris operates around 40 manufacturing sites to produce oral solid doses, injectables, complex dosage forms and active pharmaceutical ingredients. PTI MSS RAM
