Biocon Biologics has been positioning itself to become a global player in biosimilar drugs. Viatris, a longtime partner to Biocon, is charting a course for its future that does not include biosimilars. The two companies have struck a deal that brings each closer to its goal. Biocon is acquiring Viatris’s biosimilars business in a transaction valued at up to $3.3 billion.
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Biosimilars are biological drugs that are nearly identical to the original product in nearly every way except for the price of these expensive medicines. The deal announced Monday gives Biocon rights to a Viatris biosimilars portfolio projected to top $1 billion in revenue next year. Those medicines are sold in developed markets, and complement Biocon’s portfolio of 20 biosimilars commercialized in emerging markets.
The connections between the partners predate Viatris. Bengaluru, India-based Biocon struck up an alliance with Viatris predecessor Mylan in 2009, a deal that had the two companies work together to develop monoclonal antibody biosimilars. In 2013, the partnership expanded to insulin biosimilars. Viatris formed in 2020, the product of the merger of Mylan and Pfizer’s Upjohn division, which was comprised of generic medications and branded drugs that are off-patent.
Soon after the merger closed, Canonsburg, Pennsylvania-based Viatris began a strategic review to identify which assets it would keep and which ones it would sell. The biologics business being sold to Biocon is one of several transactions Viatris is planning; in its announcement of full year 2021 financial results Monday, the company said it estimates divesting non-core assets will generate about $9 billion. Viatris said it expects to unload additional assets by the end of next year with the goal of “removing inefficiency and complexity” in the drug portfolio.
Viatris isn’t the only company getting out of 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 under its own strategic review that the Swiss pharma giant has said could result in a spinoff of the business.
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According to a Biocon investor presentation, Viatris will receive $2 billion cash and $1 billion in stock representing at least a 12.9% equity stake in Biocon. Viatris could receive up to $335 million more. In a Viatris regulatory filing, the company said that this payment breaks down to $160 million payable on the second anniversary of the closing of the sale of the biosimilars business, and another $175 million payable on April 8, 2024. The deal gives Biocon the right to acquire a Viatris product candidate in development as a biosimilar to Regeneron Pharmaceuticals’ blockbuster macular degeneration drug aflibercept (Eylea). If Biocon chooses not to acquire the aflibercept product candidate, Viatris would not receive the $175 million payment.
Biocon and Viatris expect to close the transaction in the second half of this year. When it happens, Viatris will have one nominee on the Biocon board of directors.
“The deal will enable [Biocon] to attain a robust commercial engine in the developed markets of U.S. and Europe and will fast track our journey of building a strong global brand,” Kiran Mazumdar-Shaw, executive chairperson of Biocon, said in a prepared statement. “It will also make us future-ready for the next wave of products.”
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