Biocon Limited

Biocon Group reported a robust Q2 FY26 with operating revenue reaching INR 4,296 crores, marking a 20% year-on-year growth. This performance was primarily fueled by strong contributions from the biosimilars segment, which grew 25% year-on-year to INR 2,721 crores, and the generics segment, which saw a 24% year-on-year increase to INR 774 crores. Core EBITDA for the group stood at INR 1,218 crores, up 23% year-on-year, with a healthy margin of 28%, while overall EBITDA grew 29% year-on-year to INR 928 crores, achieving a 21% margin.

The company significantly strengthened its balance sheet by settling structured debt obligations with Goldman Sachs and Kotak, utilizing QIP proceeds. An agreement with Edelweiss for debt exit is also in progress, expected by January 31. Management projects annual savings of approximately INR 300 crores in interest costs from FY '27, with the impact of Goldman Sachs' exit already reflected, Kotak's in Q3 FY26, and Edelweiss's in Q4 FY26. A previously issued CP of INR 6 billion has also been repaid.

Biocon achieved a key milestone with U.S. FDA approval of bDenosumab and successfully launched five biosimilar products, including bUstekinumab (Yesintek), bAspart, bBevacizumab, and bAflibercept, across various geographies. Yesintek gained strong commercial traction in the U.S., securing broad coverage. The company also launched the first and only interchangeable biosimilar Aspart in the U.S., anticipating strong traction to grow in calendar year 2026 after commercial payer engagements in 2025. The biosimilars segment reported INR 2,721 crores in revenue, up 25% YoY, with EBITDA growing over 40% to INR 669 crores and a 25% margin.

The generics business delivered strong revenue performance, growing 24% year-on-year to INR 774 crores, with an 11% sequential increase. This growth was supported by recent product launches in both the U.S. and EU, as well as the base business across generic formulations and APIs. A key driver was the launch of GLP-1 Liraglutide in the European market and Sacubitril/Valsartan in Q2 FY26. While gross margins were in the mid-40s in H1 FY26, management expects improvement in coming quarters, with R&D investments projected to be 8-10% of segment revenues.

Syngene's performance was in line with expectations, reporting INR 911 crores in revenue, a 2% year-on-year increase, and an EBITDA of INR 215 crores with a 23% margin. Strategically, Syngene secured its first global Phase III clinical trial from a U.S.-based biotech company and expanded its clinical trials footprint to new regions like Australia, New Zealand, and the U.K. The company is also expanding its biologic facility in Bengaluru by adding a GMP bioconjugation suite to enhance end-to-end manufacturing capabilities for Antibody Drug Conjugates (ADCs).

Management views the revised FDA guidance on lowering requirements for comparative efficacy trials as a significant positive. This change is expected to reduce development costs and shorten time-to-market for biosimilar products, benefiting patients. While it may encourage more players, Biocon believes its established track record and focus on CMC and GMP clearance give it a clear advantage in bringing products to market faster, seeing it as an opportunity to expand its portfolio rather than a competitive threat. This also influences their strategy for upcoming patent cliffs like Keytruda, where they believe their scientific data may suffice without Phase III clinical trials.