Biocon’s need for a European unit to sell diabetes medicines lessened after it signed an agreement with Pfizer Inc. last year to sell insulin products worldwide, Chairman Kiran Mazumdar Shaw told reporters in Bangalore, where the company is based.
“This decision is really driven by the fact that the relevance of AxiCorp has materially changed after our Pfizer deal,” Shaw said at a press conference broadcast on Bloomberg UTV today. AxiCorp’s founders will buy back Biocon’s 78 percent stake, Shaw said, without disclosing the amount.
The stake-sale follows the German government’s move to cut drug prices by as much as 16 percent last year. Sales at AxiCorp, in which Biocon bought a stake three years ago, fell 5.7 percent to 2.3 billion rupees ($52 million) in the quarter ended March 31 from a year earlier.
“We view this as highly positive,” Priti Arora, an analyst at Kotak Institutional Securities in Mumbai, said in an e-mail. “It presented the risk of lowering Biocon profitability due to severe price cutting measures in Germany.”
Biocon shares declined 4 percent, the most in more than two months, to 370.25 rupees at the 3:30 p.m. close in Mumbai today. The Bombay Stock Exchange’s benchmark Sensitive Index lost 0.8 percent.
Separately, the company said net income climbed to 1.01 billion rupees, or 5.1 rupees a share, in the three months ended March 31, from 806.2 million rupees, or 4.08 rupees, a year earlier. That compares with the 1.02 billion rupee average of 11 analyst estimates compiled by Bloomberg. Sales rose 6.8 percent to 7 billion rupees.
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