Biocon (BIOCON) Q4 08/09 earnings summary

Executive summary

• Consolidated revenue rose 53% YoY to Rs 16,732m, including AxiCorp; excluding AxiCorp, revenue grew 10% to Rs 11,937m.

• Operating profits and margins were sustained, but consolidated PAT fell to Rs 931m after Rs 1,472m of net exceptional losses, primarily foreign-exchange MTM losses.

• Strategy centered on affordable innovation, biosimilars and novel biologics, supported by expanding research services and international partnerships.

Financial highlights

• Consolidated EBITDA increased 16% YoY to Rs 3,878m; PAT before exceptional items rose 7% to Rs 2,403m, versus Rs 2,245m.

• Consolidated PAT after exceptional items was Rs 931m, down from Rs 4,639m; basic EPS was Rs 4.83 versus Rs 24.01, with prior-year EPS adjusted for the bonus issue.

• Standalone total revenue grew 6% to Rs 9,871m; PAT before exceptional items rose 4% to Rs 2,038m, while reported net profit fell 74% to Rs 1,118m.

• Standalone net sales increased 8% to Rs 9,034m; domestic sales rose 24%, while export product sales declined 3%.

• R&D revenue expenditure rose 27% to Rs 598m; total R&D expenditure was Rs 744m, equal to 7.5% of standalone sales.

Outlook and guidance

• FY10 priorities: improve manufacturing quality at lower cost, raise specialized service capabilities, and advance incremental and transformational innovation.

• Phase III patient enrollment for oral insulin IN 105 was underway; global regulatory development of recombinant human insulin was on track, with Glargine also planned for global development.

• T1h recruitment for Phase II rheumatoid arthritis and psoriasis studies was complete; BVX-20 Phase I trials were expected to begin in 2010.

• Management anticipated opportunities in contract research, manufacturing and co-development over the next five years, supported by an affordable R&D base.