What are the prospect of Biocon after scrapping of deal with Pfizer?
-Vikas
Biocon is a biotechnology company with a strategic focus on biopharmaceuticals and research services. More than 80 per cent of the company's revenue is contributed by its biopharma business consisting statins, immuno suppressants, vaccines and insulin.
Recently, Pfizer Inc., the world's largest pharma company, scrapped a USD 350 million deal with Biocon to commercialise the firm's biosimilar versions of insulin and insulin analog products. The deal was terminated on account of change of priorities at Pfizer.
The termination comes at a time when Biocon is not in a good shape. The company has not been performing well since the past three quarters, primarily due to the under-performance of its biopharma business, low licensing income and squeezing margins.
Also, it has been one of the worst performers in the BSE Healthcare index: registering a fall of 23.1 per cent against gains of 10.7 per cent posted by the index, over one year. Over five years, however, the company's balance sheet has grown significantly with a CAGR of nearly 29 per cent in total income and 16.9 per cent in profit after tax. Its profitability ratios, namely, return on capital employed and return on net worth averaged around 17 per cent and 19 per cent respectively over five years. But Biocon is still reeling from under margins pressure with operating profit margins declining around 9 percentage points and net profit margins declining around 7 percentage points over FY08-11.
This article was originally published on April 06, 2012.
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