Serum Institute to double its investment in Biocon subsidiary to $300 mn

Vaccine manufacturer Serum Institute of India has formed a strategic alliance with Biocon Biologics, a wholly-owned subsidiary of Biocon India, to double its investment in the company.

Both entities have reached an agreement to withdraw from the original equity structure contemplated under their Strategic Alliance announced in September 2021, as per the regulatory filing of Biocon Biologics. Under the 2021 agreement between both companies, Serum Institute would get a 15% stake in Biocon Biologics at a post-money valuation of approximately $4.9 billion. The Biocon Biologics would then have access to 100 million vaccine doses per annum for 15 years as well as commercialisation rights  for Serum Institute’s vaccine, including the Covid-19 vaccine, globally.

As per the new terms of the strategic alliance, Serum Life Sciences would make an additional equity investment of $150 million through the conversion of the $150 million loan provided to Biocon Pharma Limited, a wholly-owned subsidiary of Biocon Limited, into equity in Biocon Biologics. This investment is in addition to the $150 million that Serum Institute had invested in Biocon Biologics in November 2022, resulting in Serum Institute’s aggregate equity investment in Biocon Biologics amounting to $300 million.

As per the new arrangement, Biocon Biologics will have access to 100 million doses of vaccines annually together with the distribution rights to Serum Institute’s vaccine portfolio which will add to Biocon Biologic’s product portfolio for global markets. The new terms will serve the objectives of both companies, as it provides Serum Institute with an aggregated equity investment in Biocon Biologics amounting to $300 million and provides Biocon Biologics additional product offerings for global markets.

"While Biocon Biologics had received approval from the National Company Law Tribunal (NCLT) in Karnataka, Serum Institute was awaiting approval from the NCLT in Maharashtra to complete the merger. This would have provided SILS an equity stake in BBL," Biocon Biologics said in a regulatory filing.

Following the development, shares of Biocon Biologics are trading 3.6% higher to hit an intraday high of ₹231.80 apiece on the Bombay Stock Exchange. On Tuesday, the scrip opened higher at ₹231.35 on the BSE. The scrip closed at ₹225.55 in the previous session on Monday. During the session, the company’s market capitalisation stood at ₹27,883.94 crore, as 1,90,158 were exchanging hands on the BSE as against the two-week average of 1.90 lakh shares. At present, the share price of Biocon Biologics is trading 39.6% lower than the company’s 52-week high of ₹387.80. However, shares of Biocon Biologics are trading 22.05% higher than the company’s 52-week low of ₹191.60.

For the December quarter, Kiran Mazumdar Shaw-led pharmaceutical major reported a decline in net profit to ₹140 crore as against ₹187 crore in the same period year-ago. The company’s net revenue from operations surged by 35% YoY to ₹2,941 crore as against ₹2,174 crore in the year-ago period. During the quarter, Biocon Biologics’ EBITDA surged 35% YoY to ₹723 crore.