(Reuters) – Shares of Indian drugmaker Biocon Ltd fell about 12% on Monday after the company said its unit Biocon Biologics would buy U.S.-based Viatris Inc’s biosimilars business in a transaction valued at $3.34 billion.
If losses hold, Biocon shares could post their worst session in over a year.
As per the deal, Viatris will get up to $2.34 billion in cash, and convertible shares in Biocon Biologics worth $1 billion, Biocon said in a stock exchange filing https://bit.ly/35yT0FY late on Sunday.
The cash payment will be funded through an $800 million equity commitment in Biocon Biologics, while the remainder will be through debt.
The deal will expand Biocon’s biosimilars portfolio of 20 treatments by adding therapies used for treating diabetes, tumors and autoimmune diseases and commercialising them for developed markets, the company said.
“There is no proof… on whether Biocon can execute commercial marketing of biosimilars in the U.S. and European markets and globally,” said Vishal Manchanda, research analyst at Nirmal Bang Institutional Equities.
“They have spent humongous money in taking up this (commercialisation) challenge, while at the same time also taking up debt.”
Biocon Biologics and Viatris already have an extensive collaboration agreement under which they develop, manufacture and commercialise a broad portfolio of biosimilars and diabetes generic drugs, including insulin injection Semglee.
“There are no synergies that people see from the deal on what Biocon can do more than what Viatris was doing,” Manchanda said.
(Reporting by Ahmed Farhatha and Anuron Kumar Mitra in Bengaluru; Editing by Shinjini Ganguli)
