It has been testing times for Biocon for the past year. Pfizer’s exit from its insulin co-development and marketing partnership weighed heavily on the stock. Despite limited financial impact, the break-up news was a major sentiment dampener - the stock lost over seven per cent in the wake of the announcement. From its peak of Rs 472 in October 2010, the stock lost over 48 per cent.

Though Biocon is allowed to retain the $200-million licensing income received from Pfizer as per the agreement, the company may have to meet the additional development, regulatory filing expenses and capital expenditure to scale up manufacturing, from its own pocket. Given the costs involved in developing and commercialising bio-similar products in developed markets, the company will have to scout for co-development and marketing partners globally.

Biocon posted a modest revenue growth of 15.5 per cent in 2011-12, while net profit declined eight per cent to Rs 338 crore. Slower growth of the statins portfolio due to switch in prescriptions to generic atorvastatin may also add to its woes. However, this may be negated to an extent by revenues from supplies of fidaxomicin active ingredient to Optimer for the US market.

Given the moderate growth expectation for the base business, news flow on licensing deal for its novel oral insulin molecule , Itolizumab (Psoriasis) or insulin co-marketing deal may only be the saving grace for the stock price in the near term.

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