Biocon will launch a ₹4,500-crore qualified institutional placement (QIP) to convert structured venture debt into equity and boost its promoter stake in Biocon Biologics, aiming to strengthen the balance sheet and restore profitability.
Biocon chairperson Kiran Mazumdar-Shaw told that the company’s profit margins are “being dragged down because of the structured venture debt that I took. This structured venture debt leads to a lot of provisioning and that erodes or erases your profitability”. She explained that the planned ₹4,500-crore QIP will “convert that structured venture debt into raised promoter equity. If I remove that, then my promoter equity of Biocon increases in Biologics”. This move follows Biocon Biologics’ $3.3 billion acquisition of Viatris’s global biosimilars business in 2022 and aims to reduce its roughly $1.2 billion acquisition-related debt.
The Economic Times quoting Shaw said the QIP would “create a very strong balance sheet, and it will also create a good profitability which is what this business can do”. For the quarter ended March, Biocon reported a net profit of ₹344 crore, up 153 percent year-on-year, and revenue of ₹4,454 crore, up 2 percent over last year. Shaw noted, “Today if I look at my business, I have 25 percent Ebitda on a little over a billion dollars of sales right now…we have generated $260 million of Ebitda but then look at the profitability coming down due to all this provisioning”.
The company had been weighing an IPO for its biologics arm but now sees a merger with the parent as a possible alternative. Shaw said, “Initially, we were obviously focused on an IPO for Biologics. Now, with all these market uncertainties, it’s not the right time for an IPO…our board said also, look at a merger, because that could also unlock value with all the things that are going on”. She added that the decision between listing and merging will be made “as soon as possible”.
Biocon Biologics has attracted investment from True North, Tata Capital Growth Fund, Goldman Sachs, and ADQ of Abu Dhabi, though Shaw clarified, “I am not taking all of them back…some of them are straight equity which I will not touch but many of them are structured debt and that is what we are taking out”. The unit plans five new biosimilar launches in the next 12–18 months, including aflibercept and bevacizumab, and aims to become the world’s third-largest biosimilars company within five years. In FY25, its biologics arm grew revenue 9 percent in Q4 and 15 percent for the full year, driven by U.S. market share gains and emerging-market tender wins.
With its QIP and possible merger, Biocon seeks to convert debt into equity, shore up earnings, and position its biosimilars business for global growth. As Shaw put it, removing the debt burden “will throw up good cash and profits,” setting the stage for the next phase of expansion and value creation in the biologics sector.
