- Biocon has agreed to purchase the biosimilars business of its fellow copycat medicines maker Viatris, announcing Monday a cash-and-stock deal worth up to $3.3 billion.
- The deal, which is expected to close in the latter half of this year, would expand Biocon's reach while adding to the India-based company's existing portfolio of 20 biosimilar drugs. It would also increase the profits Biocon recognizes from a longstanding partnership with Viatris. According to the companies, Viatris' biosimilars business is on track to generate $875 million in revenue for 2022 and more than $1 billion in 2023.
- For Viatris, the sale, which comes on the heels of a strategic review conducted throughout 2021, represents the company's first major structural shift since it was formed in 2019. Viatris expects to ink additional deals by the end of 2023, and estimates that divesting non-core assets like its biosimilars division will produce around $9 billion in pre-tax proceeds.
In many ways, Viatris is a product of the recent challenges faced by copycat drug developers.
In the world's largest pharmaceutical market, the U.S., generics companies have found maintaining profits more difficult because of pressure on prices. At the same time, biosimilar sales remain relatively low due to the complicated patent webs that block many manufacturers from making inroads.
For some of the biggest, most diversified drug companies, these obstacles have raised questions about whether money would be better spent elsewhere. Biogen, for instance, announced in January plans to sell its stake in a joint venture focused on biosimilars. The Swiss pharmaceutical giant Novartis has also said it might offload its struggling generics unit Sandoz.
Viatris, meanwhile, was created through a merger between Pfizer's generics business, called Upjohn, and Mylan, which had hit a series setbacks manufacturing- and pricing-related setbacks over the preceding few years.
Among the various partnerships Viatris inherited was a longstanding biosimilars pact with Biocon. Now, Viatris is handing over that business to its partner, in exchange for a major infusion of cash. Terms of the deal hold that Viatris will receive up to $2.3 billion in cash and $1 billion worth of shares in Biocon's biosimilars subsidiary, Biocon Biologics, representing a stake of at least 12.9%.
The companies said Biocon Biologics intends to go public in India as early as late 2023.
In a statement, Viatris president Rajiv Malik called the Biocon deal "the right natural next step for our partnership," and said the resulting proceeds would help to increase his company's future research and development investments. Viatris' latest earnings report, also released Monday, shows the company spent $751 million on R&D last year.
Viatris ended 2021 with $17.8 billion in net sales, down 3% on an operational basis compared to 2020. Of that total, complex generics and biosimilars accounted for $1.3 billion.