▪ Biocon Biologics Limited’s (BBL) acquisition of Viatris’ rights in biosimilars assets, creates a unique global, vertically integrated biosimilars leader
▪ BBL will realise full revenues and profits from this business
▪ BBL will gain Viatris’ global biosimilars business whose revenues are estimated to be $1 billion next year, along with its portfolio of inlicensed biosimilar assets
▪ This transaction accelerates BBL’s direct commercialization strategy for its current and future biosimilars portfolio
▪ Viatris to provide commercial and other transition services for an expected period of two years to ensure continuity of customer service and smooth transition to BBL
▪ Deal to be value accretive to Biocon and BBL shareholders and is structured as part-cash, part-equity
▪ Debt finance supported by larger EBITDA base (consolidation of BBL, Viatris and SILS income streams) and future equity infusion
▪ Kiran Mazumdar-Shaw continues as Executive Chairperson of BBL; Viatris to designate Rajiv Malik, President of Viatris, to serve on BBL Board
Bengaluru, NFAPost: Biocon Biologics Ltd., a subsidiary of Biocon Ltd, announced that it has entered into a definitive agreement with its NASDAQ listed partner Viatris Inc. (NASDAQ: VTRS).
Accordingly, Biocon Biologics Ltd. (BBL) will acquire Viatris’ biosimilars business to create a unique fully integrated global biosimilars enterprise. Viatris will receive consideration of up to $3.335 billion, including cash up to $2.335 billion and Compulsorily Convertible Preference Shares (CCPS) in BBL, valued at $1 billion.
The Board of Directors of both companies have approved the transaction. BBL will have a comprehensive portfolio comprising its current range of commercialised insulins, oncology and immunology biosimilars as well as several other biosimilar assets currently under development. BBL also has access to the vaccines portfolio through its previously announced partnership with Serum Institute Life Sciences (SILS).
Commenting on the acquisition, Biocon Biologics Executive Chairperson Kiran Mazumdar-Shaw said this
acquisition is transformational and will create a unique fully integrated, world-leading biosimilars enterprise.
“Our long-standing global partnership with Viatris has enabled us to achieve many firsts, setting new benchmarks for the global biosimilars industry. This strategic combination brings together the complementary capabilities and strengths of both partners and prepares us for the next decade of value creation for all our stakeholders,” said Biocon Biologics Executive Chairperson Kiran Mazumdar-Shaw.
She also said the deal will enable BBL to attain a robust commercial engine in the developed markets of US & Europe and will fast-track our journey of building a strong global brand.
“It will also make us future-ready for the next wave of products. This development takes our partnership with Viatris to the next level to realize our shared purpose of impacting global health by providing affordable access to high quality essential and life -saving Biosimilar drugs,” she added.
Biocon Biologics Managing Director Arun Chandavarkar said by combining the biosimilars business of Viatris to create a global, vertically integrated business in BBL, the company is confident of unlocking significant value for our stakeholders.
“This deal gives BBL full ownership of Viatris’ rights in biosimilars assets, enabling us to recognize combined revenues and profits. To ensure a seamless transition and continued service to patients and customers, Viatris will provide commercial and other transition services to BBL for
an expected period of two years,” said Biocon Biologics Managing Director Arun Chandavarkar.
Biocon Biologics Managing Director Arun Chandavarkar said the deal provides several advantages, including strategic agility and operational efficiencies, which will help us mitigate pricing pressures in a competitive global biosimilars landscape.
“We remain committed to sustainable growth with a strong financial profile, expanded geographical reach and continued investments in R&D to build a world-leading biosimilars franchise. We believe that as a fully integrated global company, we will be able to enhance patient access and reduce healthcare inequities worldwide,” he added.
Viatris’ Executive Chairman Robert J. Coury said the company’s unique collaboration with Biocon began more than a decade ago, even before a biosimilars pathway was defined in most countries.
“During that time, we have experienced many successes, and today is no exception as we join together to create a new, uniquely positioned world class vertically integrated biosimilars leader. This transaction will allow Viatris to continue to participate in the global biosimilars space in a more optimized way, while also allowing us to accelerate our own financial priorities,” said Viatris’ Executive Chairman Robert J. Coury.
Financial Rationale
Post closure of the deal, BBL will realise the full revenue and associated profits from its partnered products; a step-up from its existing arrangement with Viatris.
The deal will expand BBL’s EBITDA base and strengthen overall financials, enabling investments for sustained long- term growth.
Synergises End- to- End Capabilities
BBL’s longstanding relationship with Viatris and experience in co-development of products positions us well to maximize value from this transaction for all its stakeholders.
The deal will lead to operational efficiencies across the complete value chain and build agile capabilities in development, manufacturing, regulatory, supply chain and commercialization in developed and emerging markets.
Expands Global Reach
Combining Viatris’ biosimilars business with BBL accelerates the build out of Biocon’s commercial capability in developed markets in order to become a strong global brand with a direct presence in U.S., Europe, Canada, Japan, Australia and New Zealand.
Large Biosimilars Portfolio
BBL currently has a portfolio of 20 biosimilars. The acquisition of biosimilars assets of Viatris significantly strengthens BBL’s position in providing affordable access to patients through its portfolio in diabetes, oncology, immunology and other noncommunicable diseases. It also prepares BBL for greater success with the commercialization of its future pipeline.
By integrating Viatris’ portfolio, BBL will have one of the broadest and deepest commercialised biosimilars portfolio in the industry:
▪ Comprehensive biosimilar insulins portfolio, including rh-Insulin, bGlargine and bAspart;
▪ A growing biosimilar oncology portfolio, including bTrastuzumab, bBevacizumab, bPegfilgrastim;
▪ A significant presence in autoimmune segment through in-licensed products like bAdalimumab, bEtanercept.
TRANSACTION DETAILS
Viatris will receive cash consideration of $2 billion on closing of the transaction and up to $335 million as additional payments expected to be paid in 2024.
Additionally, upon closing of the transaction, BBL will issue USD 1 billion of Compulsorily Convertible Preference Shares (CCPS) to Viatris, equivalent to an equity stake of at least 12.9% in the Company, on a fully diluted basis.
The transaction is expected to close in 2H-2022, subject to satisfaction of closing conditions (including certain regulatory approvals). The companies will also enter into a Transition Services Agreement, pursuant to which Viatris will provide certain transition services, including commercialization services, for an expected two-year period. Viatris also will pay USD 50 million to BBL to fund certain capital expenditures.
BBL Acquires:
▪ Viatris’ global commercial infrastructure in developed and emerging markets
▪ Viatris’ global biosimilars business with an estimated revenue of USD 875
million and EBITDA of USD 200 million for CY 2022 and estimated to exceed USD
1 billion in revenue next year
▪ Viatris’ rights in all biosimilars assets including its in-licensed portfolio and an
option to acquire Viatris’ rights in bAflibercept
▪ Transition services for an expected two-year period to ensure a seamless
transition with partners and continued services to patients and customers
Deal Financing
The cash payment of $2 billion to be funded by ~USD 800 million raised through equity infusion in BBL and the remainder to be funded by debt, additional equity or a combination thereof.
BBL has received expressions of interest from financial institutions for debt financing and equity commitments from existing shareholders.
GOVERNANCE UPDATE
Kiran Mazumdar-Shaw will continue as the Executive Chairperson of BBL. Viatris will designate Rajiv Malik, President of Viatris, to serve on the BBL Board.
