With such a well researched stock, Market not showing much love to Biocon is because of multiple reasons. My personal views on the key reasons:
- Mountain of debt to finance the Viatris biosimilar acquisition. Biocon has still not clarified on how it intends to reduce the debt especially with the current high interest rate scenario hurting them all the more…may be market is anticipating that there will be further equity dilution to comply with debt payment timelines
- Delay in launches of long anticipated biosimilars like Aspart, Bevacizumab etc.
- Limited success with Hulio biosimilar launch
- Continued price erosion on many of the biosimilars (this is industry wide problem, similar to how it played out in Generics in past few years)
- Holding company discount and muted performance of subsidiaries
There is more, but I would stop here…Many of us (including myself) bought into the narrative of Biosimilars and then saw the stock price correcting further or doing nothing over last 3-4 years. While the potential is still there, it is not converting into reality and that is why market does not want to give it any premium…Would request anyone planning to buy into Biocon to study concall over last 6-8 qtrs and they will find answers themselves…It is complex business (especially in the main market of US)
Disclaimer: No recommendation, please do your own due diligence…I exited some time back with losses…if situation improves in future, will relook at it…
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