On Thursday, Phillip Securities adjusted its outlook on Biocon Ltd (BSE:BIOS), reducing the stock's price target to INR280 from INR330, while maintaining a Neutral rating. The revision follows Biocon's second-quarter financial year 2025 results, which showed an operational performance consistent with analyst expectations. The growth in biosimilars revenue was counterbalanced by competitive pricing pressures in the Active Pharmaceutical Ingredients (API) and generics segments.
The analyst noted that Biocon's concerted efforts to decrease its debt are a positive development in the short term. However, there is a cautious stance on the company's operational forecast due to several factors. These include ongoing price competition and staggered market penetration of biosimilars in the United States, noticeable delays in the approval and launch of new biosimilars in the U.S. market, and unresolved regulatory issues concerning the company's facilities.
In light of these challenges, Phillip Securities has revised downward its earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates for Biocon for the fiscal years 2025 and 2026 by 10%. The analyst expressed optimism about Biocon's robust pipeline of biosimilars but also recognized that persistent issues with the company's facilities have hindered the launch of certain products.
Notably, launches of bAspart and bBevacizumab have been delayed, and the introduction of bUstekinumab is now set for post-February 2025. Additionally, the launch of bAflibercept is constrained by a permanent injunction.
The report concludes with the firm's decision to keep its valuation of Biocon based on the fiscal year 2026 projections, pending further clarity on the company's growth drivers amidst the current uncertainties surrounding its future product pipeline.
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