US market place is seeing far better adoption of biosimilars, as a result revalidating development possibilities for players like Biocon. Better execution and refreshed approaches for concentrate markets should really assist Biocon in choose-up of biosimilars sales. Retain acquire with revised TP of Rs 480 (from Rs 455) essential catalyst – robust market place share acquire for launched biosimilars.
US market place sees enhancing uptake of biosimilars: After a slow start off, the US market place is seeing far better traction for biosimilars. Since the initial biosimilar approval in 2015, the FDA has authorized 29 biosimilars to date of which 20 have been launched in the market place (this does not include things like 3 launched “follow-on-biologics” insulin solutions). We observe the following notable points for biosimilars in the US from current sales and prescriptions trends: volume share for current monoclonal antibodies (mAb) biosimilars launches – trastuzumab, rituximab and bevacizumab – reached 40-60% inside two years of launch, substantially greater and more rapidly than earlier launches the earlier market place perception, that mAbs (in contrast to major care solutions like insulins) would see reasonably slower switch to biosimilars, does not hold we infer value erosion for biologics brands is largely in the 20-50% variety post entry of biosimilars and when we do not have adequate information but, a certain biologics market place will take anyplace from 24 to 48 months post biosimilars entry to stabilise, in our view (comparable trends have been observed in the EU). We assume US biosimilars market place to additional evolve in terms of reimbursement mechanism, as a result, revalidating development possibilities for players like Biocon.
Biocon presses reboot button: After setbacks in Biocon Biologics/BB (leading management rejig, withdrawal of biosimilars sales guidance of $1bn by FY22 and so on), Biocon is pushing the reboot button. It has appointed Shreehas Tambe as deputy CEO of BB, and Susheel Umesh as Chief industrial officer/CCO for emerging markets we think this should really assist it to reinvigorate approaches for biosimilars in concentrate markets. Currently, its biosimilar sales split is 50:50 among MoW (most of the globe) markets and created markets (DM). While it expects greater sales and development contribution to come from DM (specially the US), we assume MoW to stay a important contributor in the close to- to medium-term (current deal for oncology biosimilars in MoW, and CCO choice corroborates similar). Execution remains the most vital aspect.
Retain Buy with TP of Rs 480 (from Rs 55): We stay positive on Biocon’s extended-term prospects for biosimilars and we think enhanced execution of launches in the US and a renewed concentrate for MoW markets should really assist it to far better choose-up biosimilars sales. Market possibilities stay abundant in DM (28 solutions in pipeline with cumulative brand sales of ~$80b). We make 1%-7.5% adjustments in our FY21-23 earnings estimates per existing outlook and roll forward valuations to March 2023e from December 2022e. Our revised TP is Rs 480 (from Rs 455).