Biocon Biologics sells 15% stake to Serum Institute

Biocon Biologics, the bio-similars arm of Biocon Ltd, will place 15% stake with Serum Institute Life Sciences, a subsidiary of the Serum Institute of India. Serum Institute is owned by the Poonawala Group. Serum Institute is already the world’s largest vaccine maker and is the Indian licensee and manufacturer of the COVID-19 vaccination, Covishield, a product of AstraZeneca. Adar Poonawala will also get a seat on the board of Biocon Biologics.

The 15% stake in Biocon Biologics has been valued at $730 million, so the overall Biocon Biologics subsidiary is being valued at around $4.86 billion. This is higher than the valuation at which a 1.80% stake in Biocon Biologics was placed with Abu Dhabi based ADQ. That had been done at a valuation of $4.20 billion. As part of the deal, Biocon Biologics gets access to 100 million doses of vaccines annually over 15 years, and this will include the COVID-19 vaccine in the initial years.

For Biocon, this deal offers a major foothold in the vaccine manufacturing space for the Biocon group, which is expected to be a big growth area in the coming years. While the relationship will begin with COVID-19 vaccines, Biocon Biologics and Serum Institute will also invest in setting up a research division for vaccines. The two companies will make and distribute vaccines and antibody treatments as part of the deal.

For Biocon stock, this is an important move because its total market cap stands at $6.3 billion. With Biocon Biosimilars getting a valuation of $4.9 billion and Syngene already having a listed valuation of $3.3 billion, the sum of parts story could prove to be value accretive for the valuation of the Biocon group as a whole. Biosimilars is expected to become a $90 billion opportunity in the near future as more of these products lose exclusivity.