Biocon Q3 profit rises 13% to Rs 103 cr; Syngene lifts revenue

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Bangalore-based pharma company Biocon ‘s third quarter profit increased 13.3
percent year-on-year to Rs 103 crore, supported by operational performance and other income but R&D expenses and slow revenue growth limited growth.

“Excluding profit contribution from Syngene, company’s net profit rose by 28 percent Y-o-Y despite a 45 percent jump in R&D spends and significant increase in tax,” says Kiran Mazumdar-Shaw, chairperson and managing director.

Revenue rose 8.7 percent to Rs 836.4 crore in quarter ended December 2015 compared to Rs 769.2 crore in year-ago period, driven by contract research business (under Syngene International) despite slow growth in biopharma and India branded formulations.

Bottomline matched analysts’ estimates while revenue and operational performance missed expectations. Profit was estimated at Rs 105.5 crore on revenue of Rs 867 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Biocon says contract research revenue increased 23 percent year-on-year to Rs 270 crore during the quarter, adding biopharm and branded formulations business registered 3 percent and 4 percent growth, respectively. Branded formulations revenue remained flat at Rs 104 crore against Rs 105 crore in same period.

Biopharma business included licensing income of Rs 32 crore for the quarter, which increased sharply against Rs 10 crore in corresponding quarter of last fiscal.

Other income in Q3 shot up 60 percent to Rs 29 crore compared to 18 crore in same quarter last fiscal.

Operating profit rose 20 percent on yearly basis to Rs 181 crore and margin expanded 190 basis points to 21.8 percent (despite higher R&D expenses), which were expected at Rs 193.4 crore and 22.3 percent, respectively.

The company says gross research and development expenses shot up 45 percent year-on-year to Rs 68 crore due to biosimilars & novel programs, adding material & power cost declined 2 percent to Rs 353 crore in quarter gone by.

“Four most advanced biosimilar and generic insulin programs (insulin glargine, trastuzumab, pegfilgrastim and adalimumabd) are on track for regulatory filings in US & Europe in 2016,” says Kiran Mazumdar-Shaw.

Finance cost declined sharply to Rs 1.5 crore from Rs 4.8 crore on yearly basis while tax expenses more than doubled to Rs 24.1 crore from Rs 11.1 crore in same period.

Meanwhile, Biocon’s subsidiary Syngene International reported a profit of Rs
59 crore in October-December quarter, a growth of 31 percent compared to Rs 45 crore in year-ago period. Revenue in same period increased 23 percent to Rs 281 crore from Rs 229 crore.

“A 23 percent revenue growth was on the back of sustained performance by all three business verticals – dedicated centres, discovery services as well as development & manufacturing services,” says Peter Bains, CEO, adding the company successfully cleared another USFDA audit in Q3.

With this FDA clearance, Syngene has now successfully cleared five USFDA audits within last three years.

Operating profit grew by 20 percent year-on-year to Rs 94 crore but margin contracted by 110 basis points to 33.4 percent in quarter gone by.

The company says phase I of Syngene Research Centre is scheduled to be commissioned in Q1FY17, adding other ongoing investments in various additional infrastructure are progressing on track and will be commissioned in near to mid-term.

Additionally, Syngene appointed Jonathan Hunt as chief executive officer of the company effective April 1 as current CEO Peter Bains will retire on March 31.

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