Biocon Biologics is taking over the biosimilars business from its long-standing partner Viatris. The transaction gives Biocon a biosimilars presence in emerging and developed markets, while Viatris divests non-core assets as part of a broader strategic review.
Biocon Biologics is positioned to become a global player in biosimilar medicines. Long-time Biocon partner Viatris is phasing out its biosimilar-free future. The two companies have reached an agreement that brings them closer to their goal. Biocon acquires the biosimilars business of Viatris in a transaction valued at $3.3 billion.
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Biosimilars are biologic drugs that are identical to the original product in almost all respects, except for the price of these expensive drugs. The transaction, announced Monday, gives Biocon the rights to a portfolio of Viatris biosimilars, which is expected to generate more than $1 billion in sales next year. These drugs are marketed in developed markets and complement Biocon's portfolio of 20 biosimilars sold in emerging markets.
The links between the partners predate Viatris. Based in Bengaluru, India, Biocon formed an alliance with Viatris' predecessor, Mylan, in 2009, an agreement whereby the two companies will work together to develop monoclonal antibody biosimilars. In 2013, the partnership was expanded to include insulin biosimilars. Viatris was created in 2020 from the merger of Mylan and Pfizer's Upjohn division, which included off-patent generic and branded drugs.
Shortly after the merger was completed, Canonsburg, Pa.-based Viatris began a strategic review to determine which assets it would retain and which it would sell. The sale of the biologics business to Biocon is one of many transactions planned by Viatris; In announcing its financial results for the year 2021 on Monday, the company said it estimated the disposal of non-core assets would bring in about $9 billion. Viatris said it plans to divest additional assets by the end of next year, in a bid to eliminate "inefficiency and complexity" from its drug portfolio. Viatris isn't the only company exiting the biosimilars business. Last month, Biogen announced it would sell its stake in its biosimilars joint venture to partner Samsung Biologics for up to $2.3 billion. And Sandoz, the generics and biosimilars business of Novartis, is currently undergoing its own strategic review, which the Swiss pharmaceutical giant says could lead to a spin-off of the business.
According to a Biocon investor presentation, Viatris will receive $2 billion in cash and $1 billion in stock, representing at least a 12.9% stake in Biocon. Viatris could get up to $335 million more. In a Viatris regulatory filing, the company announced that this payment amounts to US$160 million, payable on the second anniversary of the closing of the sale of the Biosimilars business, and an additional US$175 million, payable on April 8, 2024. The agreement gives Biocon the right to acquire an investigational Viatris product candidate as a biosimilar to aflibercept (Eylea), a lead macular degeneration drug from Regeneron Pharmaceuticals. If Biocon decides not to acquire the product candidate aflibercept, Viatris would not receive the $175 million payment.
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Biocon and Viatris expect the transaction to close in the second half of this year. When that happens, Viatris will have a nominee for the Biocon board.