Biocon, Pfizer file for divorce
Biocon, India's largest biotechnology company by revenue, and US drug major Pfizer on Tuesday called off their $350- million (Rs 1,750-crore) deal to sell insulin products made by Biocon. HT reports. Sweet sorrowbusiness Updated: Mar 14, 2012 01:39 IST
Biocon, India's largest biotechnology company by revenue, and US drug major Pfizer on Tuesday called off their $350- million (Rs 1,750-crore) deal to sell insulin products made by Biocon. Though the parting was amicable, Biocon's shares fell 6% as the news was perceived as a lost global market opportunity for the Bangalore company founded by Kiran Mazumdar Shaw.
Cancellation of the deal means that Biocon will now have to search for new partners for selling insulin products in the US, Europe and other countries. The deal signed in October 2010 had given Pfizer exclusive rights to commercialise "biosimilars" of human insulin Glargine, Aspart and Lispro developed by Biocon. The global market for biosimilar insulin and related products is around $15 billion.
"The companies have agreed that due to the individual priorities for their respective biosimilars businesses, it is in their best interest to move forward independently," said the companies in a joint statement.
Biosimilars are officially approved versions of innovator bio-pharmaceutical drugs, which are produced by using biotechnological methods.
Under the deal Biocon received $100 million in upfront payments in October 2010 after Pfizer agreed to sell four of Biocon's medications around the world.
Another $100 million was kept in an escrow account pending certain milestones to be achieved under the partnership. As part of the settlement, Biocon will keep all the upfront and milestone payments it has received.
"We believe Biocon will retain a major portion of this $200 million but now stands to lose about $150 million that it was supposed to receive as milestones for regulatory filings in 3-5 years," said Siddhant Khandekar, analyst at brokerage ICICI Direct.
Biocon's shares fell 6% to Rs 251 on the BSE on Tuesday.
"Biocon will continue to work with its existing partners in several markets and will pursue a commercial strategy on its own and through new alliances in other markets," said Kiran Mazumdar Shaw, CMD, Biocon.