Adar Poonawala’s Serum Institute of Life Sciences (SILS) will acquire around 4.9 per cent in Biocon Biologics Limited (BBL), a subsidiary of Biocon Limited, with an additional equity investment of around $150 million, taking the total investment in the company to $300 million.
The new proposal is an alteration to the original plan announced on September 2021 where Biocon Biologics had offered approximately 15 per cent stake to Serum at a valuation of $4.9 billion, for which the former would get access to 100 million doses of vaccine per annum for 15 years along with commercialisation rights of Serum’s vaccine portfolio, including Covid-19 vaccines for global markets.
“Under the new terms of strategic alliance, Serum Life Sciences would make an additional equity investment of $150 million through conversion of the $150 million loan provided to Biocon Pharma, a wholly owned subsidiary of Biocon, into equity in BBL. This investment is in addition to the $150 million that SILS had invested in Biocon Biologics in November 2022, resulting in SILS’s aggregate equity investment in BBL amounting to $300 million,” a stock exchange filing of Biocon said.
BBL, however, will continue to have access to the 100 million doses of vaccines annually together with the distribution rights to Serum’s vaccine portfolio which will add to BBL’s product portfolio for global markets.
The two companies — BBL and SILS — reached the agreement to withdraw the original equity structure under the previously announced plan. While BBL had received approval from NCLT in Karnataka, SILS was awaiting the approval from NCLT in Maharashtra, the exchange filing said.
“$300 million is one of the largest investments we have made in a strategic alliance. This will amount to a 4.9 per cent stake now because the valuation of Biocon Biologics is close to around $6 billion,” Serum CEO Adar Poonawala told CNBC TV 18.
“I can’t comment whether we will increase the investment in the future or not. I know that there are many other investors looking at taking a stake in Biocon Biologics. We are optimistic on this business going forward,” said Poonawala.
He added that the initial plan was to make and sell Covid vaccines through BBL. The new agreement is not limited to Covid vaccines only. With a 15-year arrangement there is plenty of time for both parties to generate good sales.