Biocon to spend Rs 200 cr on R&D, manufacturing

Healthcare products manufacturer Biocon plans to spend $100 million in its efforts to develop

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insulin drugs over the next 3-4 years, said its chairperson and managing director Kiran Mazumdar Shaw.

Further, the company is also looking at investing around Rs 200 crore towards stepping up its manufacturing and research capabilities in the domestic market this fiscal, she said.

Of this, the company plans a capital expenditure of around Rs 100 crore towards the Research & Development centre in Bangalore, which would be operational in the next six months, said Shaw.

“The R&D centre would house 500-600 scientists. Apart from the capex, we would also be investing in drug development. For instance, we are hopeful to put in $100 million in the next 3-4 years towards research on insulin products,” she told reporters in Hyderabad on the sidelines of an international conference on patient safety.

The company has already invested Rs 50 crore in its Active Pharmaceutical Ingredients facility in Hyderabad. “We would further invest another Rs 50 crore in a couple of years,” she said.

On the other hand, the company is not keen on inorganic growth this financial year. “We are not looking at acquisitions as of now and are not even evaluating any potential companies. However, if we take the inorganic growth route it will be in the formulations business,” she said. The company had in 2008, acquired a German company AxiCorp.

The Bangalore-based company, which has a major thrust on diabetes drug development, feels that the increase in sales of human insulin due to the 18 per cent hike in the price allowed by the National Pharmaceutical Pricing Authority (NPPA), will be reflected in its balance sheets in the first quarter of current financial year. “Increase in insulin prices is a positive sign. It will have an impact on our balance sheet from this quarter (April-June),” she said, without giving details.

In March, NPPA had allowed an increase in the drug prices keeping in view the rising raw material costs and processing losses. Biocon has a supply pact with pharma giant Pfizer for four generic insulin products for the US market and other developed and emerging countries. These are expected to be in market this year.

Shaw said Biocon is also looking at implementing cost cutting initiatives and changing the product mix in Germany to hedge against the recent rebate introduced there for drug companies. “We need to go beyond the cost-cutting, as you can not create 16 per cent margin out of nothing. It would have a long impact on insulin vaccine, anti body production, R&D, and diagnostics,” she said.

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