Biocon Ltd. - Quarterly/Annual Result Disclosures and Notes dated 30 Sep 2024

1. The unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2024 in respect of Biocon Limited (‘the Company’) have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at their meetings held on October 30, 2024. The above results have been subjected to limited review by the statutory auditors of the Company. The reports of the statutory auditors are unqualified.

2. These financial results have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) prescribed under Section 133 of the Companies Act, 2013 and other accounting principles generally accepted in India and in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

3. The consolidated financial results include the financial results of the Company and its subsidiaries as follows:
i. Syngene International Limited (‘Syngene’)
ii. Biocon Biologics Limited (“BBL”) (formerly known as ‘Biocon Biologics India Limited’)
iii. Biocon Pharma Limited (“BPL”)
iv. Biocon Academy
v. Biocon SA
vi. Biocon SDN. BHD
vii. Biocon FZ LLC
viii. Biocon Biologics UK Limited (formerly known as ‘Biocon Biologics Limited’)
ix. Biocon Pharma Inc.
x. Biocon Biologics Healthcare Malaysia SDN. BHD (formerly known as ‘Biocon Healthcare SDN. BHD’)
xi. Biocon Pharma Ireland Limited
xii. Biocon Pharma UK Limited
xiii. Biocon Biosphere Limited
xiv. Biocon Biologics Inc.
xv. Biocon Biologics Do Brasil Ltda
xvi. Biocon Biologics FZ-LLC
xvii. Biocon Pharma Malta Limited
xviii. Biocon Pharma Malta I Limited
xix. Syngene USA Inc.
xx. Syngene Manufacturing Solutions Limited
xxi. Syngene Scientific Solutions Limited
xxii. Biosimilar Collaborations Ireland Limited
xxiii. Biosimilars Newco Limited
xxiv. Biocon Biologics Canada Inc.
xxv. Biocon Biologics Germany GmbH
xxvi. Biocon Biologics France S.A.S
xxvii. Biocon Biologics Spain, S.L.
xxviii. Biocon Biologics Switzerland AG
xxix. Biocon Biologics Belgium BV
xxx. Biocon Biologics Finland OY
xxxi. Biocon Generics Inc.
xxxii. Biocon Biologics Morocco S.A.R.L.A.U
xxxiii. Biocon Biologics Greece SINGLE MEMBER P.C
xxxiv. Biocon Biologics South Africa (PTY) Ltd
xxxv. Biocon Biologics (Thailand) Co. Ltd
xxxvi. Biocon Biologics Philippines Inc
xxxvii. Biocon Biologics Italy S.R.L
xxxviii. Biocon Biologics Croatia LLC
xxxix. Biocon Biologics Global PLC (incorporated on July 19, 2024)

Biocon Limited and its subsidiaries are collectively referred to as ‘the Group’. In addition to the above, the consolidated financial results also include the financial results in respect of Biocon India Limited Employee Welfare Trust, Biocon Limited Employees Welfare Trust, Biocon Biologics Employees Welfare Trust and Syngene Employees Welfare Trust. The Company has also accounted for its share of interest in the joint venture i.e. NeoBiocon FZ-LLC (‘JV’) and share of investment in the associates i.e. Iatrica Inc., and Bicara Therapeutics Inc. (“Bicara”) (also refer note 4), under the equity method.

4. Bicara Therapeutics Inc, (Bicara), U.S., is a clinical-stage biotechnology company developing dual-action biologics designed to spur a potent and durable immune response in the tumor microenvironment.
During the year ended March 31, 2024, pursuant to fund raise by Bicara, the Group’s interest in Bicara was diluted thereby resulting in loss of significant influence over the investee. Consequently, the Group fair valued its investment resulting in a gain of Rs. 123 million and Rs. 4,254 million in the standalone and consolidated financial results, respectively, and was disclosed under ‘Other income’.
Prior to the Series C financing, the Group accounted for its investments in Bicara using the equity method as it had significant influence. Consequently, the Group recorded dilution gain of Rs. 746 million and Rs. 1,053 million for quarter and half year ended September 30, 2023 and year ended March 31, 2024, respectively, disclosed under ‘Other income’ in the consolidated financial results.
During the quarter and half year ended September 30, 2024, Biocon fair valued its investment in Bicara which resulted into gain of Rs. 5,888 million, recorded within “Other Comprehensive Income” in the consolidated financial results.

5. A) In year ended March 31, 2024, Biocon Biologics Limited (“BBL”) sold its business of: (i) Branded generic immunotherapy and nephrology small molecule formulations being manufactured by third parties under manufacturing arrangements and (ii) the in-licensed product in India for a consideration of Rs. 3,660 million. The Group recorded a gain of Rs. 3,500 million net of cost of the related underlying assets.
B) In April 2024, BBL sold to Eris Lifesciences (‘Eris’) its business in relation to Metabolics, Oncology, and Critical Care products in India for a consideration of Rs. 12,420 million. Further, BBL signed a 10 year supply agreement with Eris. This resulted in a gain of Rs. 10,573 million after taking into account working capital and expenses incurred towards commercial collaboration and the same was disclosed under ‘’Other income” in the consolidated financial results for the quarter ended June 30, 2024 and half year ended September 30, 2024.

6. Sale of services include licensing fees of Rs. 125 million and Rs. 60 million for the quarter ended September 30, 2024 and September 30, 2023, respectively. Similarly, Rs. 1,928 million was recorded for the year ended March 31, 2024.

7. On April 24, 2024, the Board of Directors of Syngene approved an allotment of 521,981 equity shares of Rs. 10 each of Syngene to Syngene Employee Welfare Trust at face value to allot fresh equity shares upto 1.67% of the paid-up equity capital of Syngene in tranches for the purpose of implementation of the Syngene International Limited – Restricted Stock Unit Long Term Incentive Plan FY 2020.

8. On April 24, 2024, the Board of Directors of Syngene recommended a final dividend of Rs. 1.25 per equity share of Rs. 10/-. This was approved by the shareholders of Syngene in the Annual General Meeting dated July 24, 2024, and has been distributed to the shareholders of Syngene during the quarter and half year ended September 30, 2024.

9. On May 16, 2024, the Board of Directors of the Company recommended a final dividend of Rs. 0.50 per equity share of Rs. 5/- each. This was approved by the shareholders of Company in the Annual General Meeting dated August 09, 2024, and has been distributed to the shareholders of the Company during the quarter and half year ended September 30, 2024.

10. Pursuant to amendment in The Finance Act, 2024, resulting in withdrawal of indexation benefit on Long-Term Capital Gain, the Company has written off Deferred Tax Asset created towards indexation benefit on Land amounting to Rs. 199 million. This is recorded under ‘Tax expense’ in the standalone and consolidated financial results for the quarter and half year ended September 30, 2024.

11. Subsequent to the quarter and half year ended September 30, 2024, Biocon Biologics Global Plc, one of the subsidiary of BBL, raised Rs. 67,056 million by issue of senior secured Notes (‘Bonds’), listed on Singapore Stock Exchange. The transaction was settled on October 9, 2024.
Additionally, BBL has entered into a commitment agreement for a new syndicate debt facility. The proceeds from the Bonds, along with the new syndicate debt facility, will be utilized to substantially refinance existing debt of USD 1.1 billion (Rs. 92,202 million). This refinancing will enhance the Group’s liquidity profile, provide financial flexibility, and create opportunities for reinvestment in the business.
Since the transaction occurred after September 30, 2024, these financial results do not reflect the impact of the Bonds issuance and the refinancing of existing debt. The Group is currently in compliance with the debt covenants for the existing debts as at 30 September 2024.

12. During the quarter and half year ended September 30, 2024, Biocon Limited has discounted its receivables for Rs. 1,196 million on non-recourse basis and included in “short-term borrowings” in consolidated financial results.

13. The Group considers estimated shelf life of products, planned product discontinuances, price changes, ageing of inventory and introduction of competitive new products, to the extent each of these factors impact the Group’s business and markets, in determining the provision for slow moving, obsolete and other non-saleable inventory. Pursuant to the take-over of the Viatris's biosimilar business and completion of first anniversary since the exit from the transition service agreement, BBL re-assessed the provision for inventory of finished goods, raw material and semi-finished goods. This assessment resulted into a release of provision of Rs. 650 million in the current quarter and the credit has been accounted for as a change in estimate within ‘Changes in inventories of traded goods, finished goods and work-in-progress’ and ‘Cost of materials consumed’ in the consolidated financial results for the quarter and half year ended September 30, 2024.

14. Exceptional items:
a. During the half year ended September 30, 2023, Biocon Pharma Limited, a subsidiary of the Company, settled the Inter-Corporate Deposit (‘ICD’) obtained from Serum Institute Life Sciences Private Limited (“SILS”), amounting to Rs. 12,400 million by transfer of BBL’s equity shares held by BPL (including shares purchased from the Company during the said quarter) to SILS.
On the above sale of shares to BPL amounting to Rs. 234 million, Biocon Limited recorded a gain of Rs. 197 million.

b. On 04 July 2023, Syngene entered into a binding term sheet for acquiring Unit 3 biologics manufacturing facility in Bangalore, India, from Stelis Biopharma Limited (SBL). The unit has been acquired effective 1 December 2023 on a slump sale basis at a total cash consideration of Rs. 5,632 million.
Pursuant to above acquisition, Syngene incurred transaction costs of Rs. 74 million and Rs. 111 million during the quarter ended September 30, 2023 and year ended March 31, 2024, respectively, and the same has been disclosed in the consolidated financial results. Consequential tax impact of Rs. 21 million and Rs. 31 million is included in tax expense for the respective periods.

c. The Department of Pharmaceuticals (‘DOP’), via Corrigendum dated October 20, 2023, has modified the PLI guidelines to limit the annual incentive allocation to each applicant for the first 4 years of the scheme. Pursuant to such guidelines, during the quarter and half year ended September 30, 2023 and year ended March 31, 2024, the Group reversed Rs. 166 million of excess PLI accrual made in the books, of which Rs. 52 million of excess PLI accrual was reversed in Standalone financial results of Biocon Limited. Consequential tax impact of Rs. 22 million is included in tax expense for the above periods.

d. During the year ended March 31, 2024, one of the subsidiaries of Biocon Biologics Limited (“BBL”) had received Rs. 18,269 million towards working capital under the existing arrangements. BBL had recorded these receivables at fair value of Rs. 10,219 million having regard to the timing and probability of recovery. The resulting difference of Rs. 8,050 million is recorded as a gain in the consolidated financial results. Consequential tax impact of Rs. 407 million is included within tax expense for the year ended March 31, 2024.

e. During the year ended March 31, 2024, one of the subsidiaries of Biocon Biologics Limited (“BBL”) pursuant to the uncertainty of ability to commercialize a product for development and commercialization in certain territories, recorded an impairment of the carrying value of the intangible asset amounting to Rs. 3,854 million.

f. During the year ended March 31, 2024, one of the subsidiaries of Biocon Biologics Limited (“BBL”) recorded provision for inventory for a product due to its low demand and consequentially lower probability of liquation amounting to Rs. 2,366 million. This was recorded in the consolidated statement of profit and loss under the head ‘Exceptional Item’.
During the quarter and half year ended September 30, 2024, BBL liquidated such inventory amounting to Rs. 260 million. Hence, the related provision has been reversed and reflected as an exceptional item in the consolidated financial results. Consequential tax impact of Rs. 38 million is included within tax expense.

g. During the quarter and year ended March 31, 2024, Biocon Pharma Limited and its subsidiaries pursuant to the uncertainty in commercialization of product in certain territories, recorded an impairment of the carrying value of the intangible asset amounting Rs. 91 million.

h. BBL had obtained services of professional experts (like advisory, legal counsel, valuation experts etc.) for the acquisition of Viatris Biosimilar’s business in the year 2023. The Group recorded Rs. 1,582 million in the year ended March 31, 2024 as an expense in the consolidated statement of profit and loss.

i. During the quarter ended June 30, 2024, Syngene received its final claim of Rs. 320 million from the insurance company for the loss of fixed assets in fire incident on December 12, 2016.
1. The unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2024 in respect of Biocon Limited (‘the Company’) have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at their meetings held on October 30, 2024. The above results have been subjected to limited review by the statutory auditors of the Company. The reports of the statutory auditors are unqualified.

2. These financial results have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) prescribed under Section 133 of the Companies Act, 2013 and other accounting principles generally accepted in India and in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

3. The consolidated financial results include the financial results of the Company and its subsidiaries as follows:
i. Syngene International Limited (‘Syngene’)
ii. Biocon Biologics Limited (“BBL”) (formerly known as ‘Biocon Biologics India Limited’)
iii. Biocon Pharma Limited (“BPL”)
iv. Biocon Academy
v. Biocon SA
vi. Biocon SDN. BHD
vii. Biocon FZ LLC
viii. Biocon Biologics UK Limited (formerly known as ‘Biocon Biologics Limited’)
ix. Biocon Pharma Inc.
x. Biocon Biologics Healthcare Malaysia SDN. BHD (formerly known as ‘Biocon Healthcare SDN. BHD’)
xi. Biocon Pharma Ireland Limited
xii. Biocon Pharma UK Limited
xiii. Biocon Biosphere Limited
xiv. Biocon Biologics Inc.
xv. Biocon Biologics Do Brasil Ltda
xvi. Biocon Biologics FZ-LLC
xvii. Biocon Pharma Malta Limited
xviii. Biocon Pharma Malta I Limited
xix. Syngene USA Inc.
xx. Syngene Manufacturing Solutions Limited
xxi. Syngene Scientific Solutions Limited
xxii. Biosimilar Collaborations Ireland Limited
xxiii. Biosimilars Newco Limited
xxiv. Biocon Biologics Canada Inc.
xxv. Biocon Biologics Germany GmbH
xxvi. Biocon Biologics France S.A.S
xxvii. Biocon Biologics Spain, S.L.
xxviii. Biocon Biologics Switzerland AG
xxix. Biocon Biologics Belgium BV
xxx. Biocon Biologics Finland OY
xxxi. Biocon Generics Inc.
xxxii. Biocon Biologics Morocco S.A.R.L.A.U
xxxiii. Biocon Biologics Greece SINGLE MEMBER P.C
xxxiv. Biocon Biologics South Africa (PTY) Ltd
xxxv. Biocon Biologics (Thailand) Co. Ltd
xxxvi. Biocon Biologics Philippines Inc
xxxvii. Biocon Biologics Italy S.R.L
xxxviii. Biocon Biologics Croatia LLC
xxxix. Biocon Biologics Global PLC (incorporated on July 19, 2024)

Biocon Limited and its subsidiaries are collectively referred to as ‘the Group’. In addition to the above, the consolidated financial results also include the financial results in respect of Biocon India Limited Employee Welfare Trust, Biocon Limited Employees Welfare Trust, Biocon Biologics Employees Welfare Trust and Syngene Employees Welfare Trust. The Company has also accounted for its share of interest in the joint venture i.e. NeoBiocon FZ-LLC (‘JV’) and share of investment in the associates i.e. Iatrica Inc., and Bicara Therapeutics Inc. (“Bicara”) (also refer note 4), under the equity method.

4. Bicara Therapeutics Inc, (Bicara), U.S., is a clinical-stage biotechnology company developing dual-action biologics designed to spur a potent and durable immune response in the tumor microenvironment.
During the year ended March 31, 2024, pursuant to fund raise by Bicara, the Group’s interest in Bicara was diluted thereby resulting in loss of significant influence over the investee. Consequently, the Group fair valued its investment resulting in a gain of Rs. 123 million and Rs. 4,254 million in the standalone and consolidated financial results, respectively, and was disclosed under ‘Other income’.
Prior to the Series C financing, the Group accounted for its investments in Bicara using the equity method as it had significant influence. Consequently, the Group recorded dilution gain of Rs. 746 million and Rs. 1,053 million for quarter and half year ended September 30, 2023 and year ended March 31, 2024, respectively, disclosed under ‘Other income’ in the consolidated financial results.
During the quarter and half year ended September 30, 2024, Biocon fair valued its investment in Bicara which resulted into gain of Rs. 5,888 million, recorded within “Other Comprehensive Income” in the consolidated financial results.

5. A) In year ended March 31, 2024, Biocon Biologics Limited (“BBL”) sold its business of: (i) Branded generic immunotherapy and nephrology small molecule formulations being manufactured by third parties under manufacturing arrangements and (ii) the in-licensed product in India for a consideration of Rs. 3,660 million. The Group recorded a gain of Rs. 3,500 million net of cost of the related underlying assets.
B) In April 2024, BBL sold to Eris Lifesciences (‘Eris’) its business in relation to Metabolics, Oncology, and Critical Care products in India for a consideration of Rs. 12,420 million. Further, BBL signed a 10 year supply agreement with Eris. This resulted in a gain of Rs. 10,573 million after taking into account working capital and expenses incurred towards commercial collaboration and the same was disclosed under ‘’Other income” in the consolidated financial results for the quarter ended June 30, 2024 and half year ended September 30, 2024.

6. Sale of services include licensing fees of Rs. 125 million and Rs. 60 million for the quarter ended September 30, 2024 and September 30, 2023, respectively. Similarly, Rs. 1,928 million was recorded for the year ended March 31, 2024.

7. On April 24, 2024, the Board of Directors of Syngene approved an allotment of 521,981 equity shares of Rs. 10 each of Syngene to Syngene Employee Welfare Trust at face value to allot fresh equity shares upto 1.67% of the paid-up equity capital of Syngene in tranches for the purpose of implementation of the Syngene International Limited – Restricted Stock Unit Long Term Incentive Plan FY 2020.

8. On April 24, 2024, the Board of Directors of Syngene recommended a final dividend of Rs. 1.25 per equity share of Rs. 10/-. This was approved by the shareholders of Syngene in the Annual General Meeting dated July 24, 2024, and has been distributed to the shareholders of Syngene during the quarter and half year ended September 30, 2024.

9. On May 16, 2024, the Board of Directors of the Company recommended a final dividend of Rs. 0.50 per equity share of Rs. 5/- each. This was approved by the shareholders of Company in the Annual General Meeting dated August 09, 2024, and has been distributed to the shareholders of the Company during the quarter and half year ended September 30, 2024.

10. Pursuant to amendment in The Finance Act, 2024, resulting in withdrawal of indexation benefit on Long-Term Capital Gain, the Company has written off Deferred Tax Asset created towards indexation benefit on Land amounting to Rs. 199 million. This is recorded under ‘Tax expense’ in the standalone and consolidated financial results for the quarter and half year ended September 30, 2024.

11. Subsequent to the quarter and half year ended September 30, 2024, Biocon Biologics Global Plc, one of the subsidiary of BBL, raised Rs. 67,056 million by issue of senior secured Notes (‘Bonds’), listed on Singapore Stock Exchange. The transaction was settled on October 9, 2024.
Additionally, BBL has entered into a commitment agreement for a new syndicate debt facility. The proceeds from the Bonds, along with the new syndicate debt facility, will be utilized to substantially refinance existing debt of USD 1.1 billion (Rs. 92,202 million). This refinancing will enhance the Group’s liquidity profile, provide financial flexibility, and create opportunities for reinvestment in the business.
Since the transaction occurred after September 30, 2024, these financial results do not reflect the impact of the Bonds issuance and the refinancing of existing debt. The Group is currently in compliance with the debt covenants for the existing debts as at 30 September 2024.

12. During the quarter and half year ended September 30, 2024, Biocon Limited has discounted its receivables for Rs. 1,196 million on non-recourse basis and included in “short-term borrowings” in consolidated financial results.

13. The Group considers estimated shelf life of products, planned product discontinuances, price changes, ageing of inventory and introduction of competitive new products, to the extent each of these factors impact the Group’s business and markets, in determining the provision for slow moving, obsolete and other non-saleable inventory. Pursuant to the take-over of the Viatris's biosimilar business and completion of first anniversary since the exit from the transition service agreement, BBL re-assessed the provision for inventory of finished goods, raw material and semi-finished goods. This assessment resulted into a release of provision of Rs. 650 million in the current quarter and the credit has been accounted for as a change in estimate within ‘Changes in inventories of traded goods, finished goods and work-in-progress’ and ‘Cost of materials consumed’ in the consolidated financial results for the quarter and half year ended September 30, 2024.

14. Exceptional items:
a. During the half year ended September 30, 2023, Biocon Pharma Limited, a subsidiary of the Company, settled the Inter-Corporate Deposit (‘ICD’) obtained from Serum Institute Life Sciences Private Limited (“SILS”), amounting to Rs. 12,400 million by transfer of BBL’s equity shares held by BPL (including shares purchased from the Company during the said quarter) to SILS.
On the above sale of shares to BPL amounting to Rs. 234 million, Biocon Limited recorded a gain of Rs. 197 million.

b. On 04 July 2023, Syngene entered into a binding term sheet for acquiring Unit 3 biologics manufacturing facility in Bangalore, India, from Stelis Biopharma Limited (SBL). The unit has been acquired effective 1 December 2023 on a slump sale basis at a total cash consideration of Rs. 5,632 million.
Pursuant to above acquisition, Syngene incurred transaction costs of Rs. 74 million and Rs. 111 million during the quarter ended September 30, 2023 and year ended March 31, 2024, respectively, and the same has been disclosed in the consolidated financial results. Consequential tax impact of Rs. 21 million and Rs. 31 million is included in tax expense for the respective periods.

c. The Department of Pharmaceuticals (‘DOP’), via Corrigendum dated October 20, 2023, has modified the PLI guidelines to limit the annual incentive allocation to each applicant for the first 4 years of the scheme. Pursuant to such guidelines, during the quarter and half year ended September 30, 2023 and year ended March 31, 2024, the Group reversed Rs. 166 million of excess PLI accrual made in the books, of which Rs. 52 million of excess PLI accrual was reversed in Standalone financial results of Biocon Limited. Consequential tax impact of Rs. 22 million is included in tax expense for the above periods.

d. During the year ended March 31, 2024, one of the subsidiaries of Biocon Biologics Limited (“BBL”) had received Rs. 18,269 million towards working capital under the existing arrangements. BBL had recorded these receivables at fair value of Rs. 10,219 million having regard to the timing and probability of recovery. The resulting difference of Rs. 8,050 million is recorded as a gain in the consolidated financial results. Consequential tax impact of Rs. 407 million is included within tax expense for the year ended March 31, 2024.

e. During the year ended March 31, 2024, one of the subsidiaries of Biocon Biologics Limited (“BBL”) pursuant to the uncertainty of ability to commercialize a product for development and commercialization in certain territories, recorded an impairment of the carrying value of the intangible asset amounting to Rs. 3,854 million.

f. During the year ended March 31, 2024, one of the subsidiaries of Biocon Biologics Limited (“BBL”) recorded provision for inventory for a product due to its low demand and consequentially lower probability of liquation amounting to Rs. 2,366 million. This was recorded in the consolidated statement of profit and loss under the head ‘Exceptional Item’.
During the quarter and half year ended September 30, 2024, BBL liquidated such inventory amounting to Rs. 260 million. Hence, the related provision has been reversed and reflected as an exceptional item in the consolidated financial results. Consequential tax impact of Rs. 38 million is included within tax expense.

g. During the quarter and year ended March 31, 2024, Biocon Pharma Limited and its subsidiaries pursuant to the uncertainty in commercialization of product in certain territories, recorded an impairment of the carrying value of the intangible asset amounting Rs. 91 million.

h. BBL had obtained services of professional experts (like advisory, legal counsel, valuation experts etc.) for the acquisition of Viatris Biosimilar’s business in the year 2023. The Group recorded Rs. 1,582 million in the year ended March 31, 2024 as an expense in the consolidated statement of profit and loss.

i. During the quarter ended June 30, 2024, Syngene received its final claim of Rs. 320 million from the insurance company for the loss of fixed assets in fire incident on December 12, 2016.