The Hindu Business Line : Biocon Q4 net down 61% on mark-to-market losses

Bangalore, April 28 Biocon Ltd said the exchange rate volatility during fiscal 2008-09 pulled the company’s net profit down 74 per cent at Rs 111.8 crore year-on-year.

The biotechnology major put the resultant consolidated MTM (mark-to-market) losses at Rs 147 crore and at Rs 92 crore for the listed company.

The company posted fourth quarter net profit of Rs 24 crore (Rs 62 crore), a decline of 61 per cent. Sales increased to Rs 230 crore (Rs 220 crore), up 4.5 per cent.

The board has recommended a dividend of Rs 3 a share.

Biocon’s Chairman & Managing Director, Ms Kiran Mazumdar-Shaw, said, “Fiscal year ’09 has been one of our most challenging years where foreign currency volatility made it difficult to manage a sharply depreciating rupee resulting in large MTM losses.”

“Going forward, we won’t see MTM losses, except for small losses for Syngene for another 2-3 years because of its long-term contracts,” Ms Mazumdar-Shaw added. “We have taken corrective measures to stem it. At an operational level it has been a rewarding year with 53 per cent growth in consolidated revenue.”

“This has been a learning period for us and our new hedging strategy enables us to address the years ahead with a sense of confidence and resilience,” she added. Last fiscal saw the rupee depreciate from Rs 40 to Rs 51 against the dollar.

Biocon would add 300-400 jobs or ten per cent to its 3000 staff this year.

As a group Biocon posted revenues of Rs 1,673 crore, 53 per cent growth year on year (Rs 1,090 crore.) The group includes fully-owned subsidiaries Syngene International and Clinigene International; and three joint ventures: the German distribution company AxiCorp GmbH; Biocon Biopharmaceuticals Private Ltd; and, NeoBiocon FZ LLC, Abu Dhabi.

AxiCorp, in which Biocon now owns 78.4 per cent equity, contributed 29 per cent to the revenue. It recently won the German AOK tender for two years for supplying diabetes drug Metformin, which Ms Mazumdar Shaw described as "an important milestone in terms of making inroads into the generics market and laying the foundation for our diabetes franchise in Germany."

Biocon plans to launch its brand Insugen and analogue Glargine in that region. AOK is a leading public health insurer covering about 40 per cent of the insured population.

Excluding AxiCorp, the consolidated revenue rose 10 per cent to Rs 1,194 crore. R&D expenditure was Rs 60 crore.

Sales revenue from research services through fully-owned Syngene and Clinigene grew 28 per cent to Rs 225 crore (Rs 176 crore); again, MTM losses amounted to Rs 18 crore.

The branded formulations business has made rapid strides in garnering market share in cardiology, diabetology, nephrology and oncology. "We see this as being a high-growth segment."

"Our future prospects are being driven by a robust R&D engine where we are making good progress both in bio-generics and novel biologics programmes. This will call for significant incremental investments which are expected to realise significant returns over the medium to long term."

The ambitious pill-form oral insulin, IN 105, is seeing patient enrolment for Phase III clinical trials. Patients have been recruited for the phase II trials of the potential rheumatoid arthritis and psoriasis drug T1h (anti-CD6) monoclonal antibody.

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