Beyond Viatris: Kiran Mazumdar-Shaw Talks Next Steps For Biocon Biologics

Speaking to Biocon founder and chairperson Kiran Mazumdar-Shaw about Biocon Biologics’ $3bn deal for the biosimilars business of former partner Viatris, the rationale for the transaction is made clear from the start. “This acquisition allowed us to acquire the full value of the business,” she summarizes when asked about the significance of the deal for Biocon Biologics. “So today we get 100% of the value.”

In an exclusive interview with Generics Bulletin – that took place as Biocon Biologics celebrated completing its integration of the Viatris business in North America – Mazumdar-Shaw not only underlined the enhanced opportunity that Biocon Biologics now boasts to capture profit from its portfolio of biosimilars across the entire supply chain, but also talked about the additional opportunities that are opening up for the company in terms of new markets and fresh product launches that are on the horizon.

Biocon’s longstanding partnership with Viatris was “over a decade old partnership,” Mazumdar-Shaw recalled as she recapped the history of the two firms, and “it was about a business model that basically saw us capture roughly 30% of the value, with Viatris capturing 70% of the value.”

“There was a clear separation of roles and responsibilities – where we were doing the research and manufacturing, and they were doing the commercialization, to put it in a very simple way.”

But now – with Biocon Biologics having last year agreed to pay up to $3.3bn for the Viatris biosimilars business (see sidebar), in a deal that closed in November (Also see "Biocon Closes $3bn Deal For Viatris Biosimilars" - Generics Bulletin, 30 Nov, 2022.) – she emphasized that “today we get 100% of the value of the business.”

“To put it into perspective,” Mazumdar-Shaw explained, “the biosimilars business is tracking at about a billion dollars of top-line, at this point in time. If you take an EBITDA of say, roughly, 30%, you’re talking about $300m of EBITDA – and we would have got only about $100m dollars of that EBITDA in the past. Today, we get the full $300m. So obviously, the value ascribed to that is quite a lot.”

And along with capturing the full share of profit from the biosimilars business, she pointed out, “you can capture more efficiency in having an integrated model. So we expect the profitability to be higher.”

“There are cost efficiencies. There are business efficiencies. And we are focusing on operational excellence, because now we have an integrated model that allows us to have an end-to-end operating model,” she outlined. “So I think it’s a very exciting opportunity to build an organization that can have a global leadership position in biosimilars. That’s what is very exciting for us.”

Integrating IT And Staff

Asked about the integration of the Viatris business in North America – which Biocon recently announced had been completed as of the start of September (see sidebar), following integration in over 70 countries in emerging markets earlier in the year (Also see "Biocon Biologics Integrates Viatris Business As It Introduces Adalimumab" - Generics Bulletin, 13 Jul, 2023.) – Mazumdar-Shaw acknowledged that “when we actually entered this deal, we didn’t know what integration meant, all the elements of integration that we would have to look into.”

The firm initially gave itself “the comfort of two years” to look into integration requirements, she said. But “once we realized what the process was and what it entailed. We felt very confident that we could do it much sooner than later.”

This was because “once we did the deal and we started looking at the business, we realized what the integration efforts were all about. And a large part of the integration was IT integration.”

“Now, you know that India is a master when it comes to IT. And so we worked with one of the big IT companies, which is very well known for its ability to help in integration, and we asked them to work with us to make sure that the IT integration happened in a smooth way.”

“That’s how we came to this aggressive timeline of 1 September,” she concluded.

Nevertheless, she acknowledged, even in the final moments of completing the integration “it was like India’s lunar landing, where we sort of waited for 1st September to see – is that integration happening smoothly or not? And of course everyone burst into joy and clapping, you know it was that kind of a moment.”

“So I think it was a very successful integration in that sense.”

In addition to the IT integration, “of course, there was a people integration bit, which was really about making sure that you transfer the people to us…you know, ensuring that the employment contracts were then also worked out.” And “all that happened very seamlessly,” Mazumdar-Shaw indicated, noting that “we have almost 150 people now in the US.”

“It’s a great moment for us, because now we have a truly North American establishment, we have people and we have the systems in place to get on with the business.”

Asked how smoothly the Viatris team meshed with the existing Biocon Biologics team, she described the addition as “a bolt-on” that fit smoothly with the existing Biocon business given that “we were not doing any commercial operations in the US.”

“So in that sense it is a seamless integration. Except that, of course, we have a few of the leadership positions that are our own.” For instance, “our chief commercial officer for advanced markets [Matthew Erick] is in the US. And the good news was that he was their boss in the past,” she noted, with Erick having worked at Viatris’ former Mylan business for a decade as a sales and marketing president for North America.

“So he’s familiar with the team. So from that point of view, the integration is much easier,” she outlined. “I think we worked it out quite well in the sense that we wanted it to be as easy and as uncomplicated as possible, so that we can hit the ground running.”

And asked whether Biocon would be further adding to the existing team, she suggested that “this team is going to basically continue with what they’ve been doing at Viatris. And as the business grows, obviously we can hire more people. But at this point in time I think the team is adequate to do what we are doing, currently.”

“For Viatris, North America was very important, and parts of Europe were very important. But we believe that there are other parts of Europe which can also open up for us.”

As part of the Viatris takeover, Biocon Biologics now markets an existing commercialized portfolio of biosimilars around the world that includes versions of adalimumab, bevacizumab, etanercept, insulin aspart, insulin glargine and pegfilgrastim – most of which were co-developed by Viatris and Biocon in the first place.

But Mazumdar-Shaw was clear that now that Biocon was in full control, it would be looking to both launch new biosimilars and market its existing portfolio in new markets.

“What we believe we can do, which maybe Viatris didn’t really address, is to really look at many markets which they didn’t even bother about, in advanced markets,” she outlined. “For them, North America was very important, and parts of Europe were very important. But we believe that there are other parts of Europe which can also open up for us. Which can actually expand our footprint and our business and our market. So I think that is the exciting thing for us.”

Pressed for specifics, she acknowledged that “right now I won’t be able to give you too much detail – but you know, Viatris has really been focusing on key markets, like France and Germany, and we think we can go much beyond that. So they have a German cluster and a French cluster. But we think we can go beyond that.”

“If you look at Europe, we already have seven approved products in that market,” she noted. “And we have four approved products in the US, and we expect two more to be added to it, and probably even a third to be added to it, because we are expecting an approval of one of our new assets that we acquired from Viatris,” she suggested, alluding to the biosimilar Eylea (aflibercept) candidate that Viatris had developed with Momenta and which was filed in late 2021. (Also see "Viatris Believes Eylea Biosimilar Candidate Is First To Reach US FDA’s Desk" - Generics Bulletin, 10 Nov, 2021.)

With aflibercept also having recently been endorsed by the European Medicines Agency – ahead of a formal approval that is expected imminently (Also see "Triple Threat: EMA Endorses Three First-Time Biosimilars" - Generics Bulletin, 21 Jul, 2023.) – “that would then make it the eighth product in in Europe. And then we would have probably six or seven products in the US in the next few years.”

“So I think it’s a very exciting business.”

Competitive Costs Are An Asset As Pricing Pressure Increases

Addressing Biocon Biologics’ position in the competitive global biosimilars market, Mazumdar-Shaw pointed to the firm’s history of successful development as well as its low development and manufacturing costs as major assets.

“Biocon has been extremely successful in terms of its ability to develop biosimilars ‘first time right’, let’s put it that way,” She said. “Our science has been proven to be of very high rigor and quality, our dossiers have always been accepted without any problem.”

“Many, many companies have had to go back to the drawing board to redevelop those products. We have not had that problem. So that makes us very confident that we can play in this space in a very competitive way.”

“So first, we’ve got our science right. We also have a very cost-competitive research base and we have a very cost-competitive manufacturing base. That’s why we believe we have a good competitive edge.”

“It’s always good to make a bigger margin. But sometimes you have to make do with a lower margin.”

However, she acknowledged that pricing pressure was growing as the market became increasingly competitive.

“We are seeing that the more competition you have in the market, people do silly things just to get a share of that market,” she suggested. “So whilst you would like to have a very good price point, sometimes you have to drop that price point because of competition.”

“The generics market has seen it – that after exclusivity, you know, 99% of the value erodes in generics. Here, it’s not 99%, but it is beginning to erode at a much faster level than was originally anticipated.” But “having said that,” she maintained, “we are still very competitive, even at that high level of discounting or erosion.”

“It’s always good to make a bigger margin. But sometimes you have to make do with a lower margin,” she conceded, acknowledging both a reluctance to match heavily discounted pricing but also the necessity to compete. “We are still very profitable and still very competitive,” she underlined. “Some of the price points and the competitive pricing, we’ve had to enter into. Obviously you don’t want that to happen. But if it happens you’re still in the game, let’s put it that way.”

Asked whether there were concerns about the wider sustainability of the market in this context, Mazumdar-Shaw said that for Biocon, “pricing is always going to be sustainable because we are still very profitable.” It was “like saying that, okay, you could be hugely profitable. Huge. Your margins would be really high. But now they’re at a profitable, good, healthy margin level, but not at the level you thought you could [generate].”

“I think that’s the reality,” she observed. “Once you have competition, there is going to be some kind of competitive pricing. Because everyone wants a piece of the cake.” But “I think a lot of the companies who we are competing with, they will probably have lower margins than us, because their cost base is much higher.”

Moving Early On Aflibercept; Adalimumab A ‘Frenzied Situation’

Invited to comment on specific product opportunities on the near-term horizon, Mazumdar-Shaw first spoke about the firm’s aflibercept rival to Eylea, which was recently endorsed in the EU under the Yesafili brand name. “That’s obviously going to be a product that we would like to really leverage in a competitive way,” she said, “because we will probably get the first approvals.”

Acknowledging that “we have to wait for patent expiry, which happens sometime next year,” she suggested that being first to market “is going to be very important for us – and our strategy is going to be very important in terms of how we can take advantage of being the first to the market.” But she was reluctant to divulge further details, saying “at this point in time, I can’t share more than this.”

Another high-profile product at the moment is adalimumab, with Biocon one of several firms challenging the Humira brand in the US with biosimilars this year (see sidebar).

Mazumdar-Shaw suggested that “the market has been in a frenzied kind of situation when it looks at adalimumab, because adalimumab was a very, very big market opportunity – or perceived market opportunity.” But “there’s a lot of competition, because there are several companies who have developed adalimumab.”

“So obviously the market competitiveness where everyone wants a big share of the market and everybody is discounting as much as they can to get a piece of the cake, has shrunk the market. So now you have a large number of competitors, and you have a much smaller market or pie to share.”

Acknowledging that this may mean that industry-wide adalimumab revenues come in below expectations, she said “everyone was expecting a nice big number, but I think we have to get used to the new reality, which is [that] it may not be as big as everyone wanted it to be.”

“Having said that, it’s still a nice market, it’s still an attractive market – and we also ourselves have managed to get on to several formularies, so we’ll see how it shapes up,” she offered. But amid the ramp-up, there “seems to be a wait and watch policy. So let’s see how it pans out.”

“I’m trying to manage our expectations,” she acknowledged. “And if it does better than that, that’s great – but I don’t want to over-commit in terms of what we think the market is worth.”

Still Awaiting US Approval For Insulin Aspart

Finally, speaking about Biocon Biologics’ insulins business – and the continuing lack of approval for its insulin aspart biosimilar in the US (Also see "Biocon Insulin Aspart US Opportunity: 'Not Completely Lost But Not The Best Situation'" - Generics Bulletin, 5 Aug, 2022.) – Mazumdar-Shaw said it was “unfortunate, because aspart has been approved in Europe, and launched in Europe, and it’s been approved in Canada, and every other part of the world.” But “the US has, for some reason, delayed the approval.”

“We are disappointed because we felt it could have been approved by now. But let’s hope that it can be approved by October, [this] is what our hope is.”

“And if that happens, obviously we’ll add a second insulin, and we’ll be the only company with two insulin analogs in the market.”

“And you know, we believe that with the focus shifting onto GLP-1s, the insulin companies are almost, we feel, going to be in a position to allow us to grab more market share. We will be, I think, in a good position to take that market share if they choose to give it up.”

“As a pure-play biosimilars company, I think we are very unique.”

Summing up the current position of Biocon Biologics as it looks to begin marketing its products worldwide through its newly-integrated commercialization arm, Mazumdar-Shaw highlighted that “we have a very nice pipeline. We have almost 20 molecules, including the ones we have today.” And “what’s interesting is that, of course, really, we have a very differentiated biosimilar story because of our insulins.”

Moreover, “we have already three products in the clinic – two of which are now entering the review process and one on the anvil of being approved, aflibercept.”

“So I think it’s a very exciting time for us, and we want to have leadership and a good market share in all the products that we are developing.”

Concluding by reflecting on how the end-to-end nature of Biocon Biologics’ model set it apart from other competitors in the biosimilars market, where development and marketing partnerships between multiple companies are commonplace, she said the firm was “quite uniquely placed – apart from the big pharma, because Amgen also has that end-to-end capability.”

But “as a pure-play biosimilars company, I think we are very unique.”