Biocon Eyes $4.5B Biocon Biologics Merger, Keeps IPO Option Open

Biocon Ltd is evaluating a merger of its biosimilars arm, Biocon Biologics Ltd, with the parent company, a move that could value the unit at around $4.5 billion. The Bengaluru-based biopharmaceutical major is in advanced discussions with minority shareholders to consider a share swap or cash-plus-swap structure, while also exploring an IPO as an alternate path.

Biocon has hired Morgan Stanley to sort through whether a merger, share swap or public offering would best unlock value for its shareholders and allow it to cut down acquisition-related debt. The move is at an opportune time when Biocon is looking to rationalise business, strengthen the balance sheet and give more focus to its biosimilar business under a single listed entity.

Why Is Biocon Considering a Merger Now

The possible merger comes on the heels of Biocon Biologics’ post-global expansion, in which it acquired Viatris’ biosimilars unit for $3.3 billion last year, adding $1.2 billion of acquisition debt to its balance sheet. According to Biocon chairperson Kiran Mazumdar-Shaw, this debt has put pressure on Biocon Biologics’ IPO valuation, prompting the company to re-evaluate its strategic options.

“The valuation we were trying to get for the IPO was under pressure because of the acquisition debt. That is why we appointed Morgan Stanley to tell us whether we should really do an IPO or go ahead with a merger or a share swap,” said Mazumdar-Shaw.

Biocon had initially planned to list Biocon Biologics separately, but market volatility and tightening liquidity have made the timing challenging. “Initially, we were focused on an IPO for Biologics. Now, with market uncertainties, the timing is not right. The board is also looking at a merger as another route to unlock value,” she added.

As of March 31, 2025, Biocon holds a 90.2% stake in Biocon Biologics, while the Serum Institute of Life Sciences owns 5.97%. Other shareholders include True North and Tata Capital, while Goldman Sachs and Abu Dhabi’s ADQ were earlier investors.

How Does This Fit into Biocon’s Financial Strategy

The merger discussion follows Biocon’s first equity fundraise since 2004, in which it raised ₹4,500 crore via a qualified institutional placement (QIP) in June 2025. The capital was used to increase Biocon’s holding in Biocon Biologics and provide exits to some private equity investors.

Biocon Limited currently commands a market capitalisation of ₹54,327 crore, positioning it as one of India’s leading biotech companies. However, the debt incurred during the Viatris acquisition has remained a key focus for management.

Mazumdar-Shaw emphasised that all options remain open until Morgan Stanley provides its recommendations. “We can still do an IPO,” she said, “but we are waiting to hear what would deliver the best long-term value for our shareholders.”

What Lies Ahead for Biocon Biologics

Biocon Biologics continues to build on its position as a fully integrated global biosimilars manufacturer. The company now touches 5.5 million patients annually across more than 100 countries, supported by a comprehensive portfolio of 20 biosimilars, one of the broadest pipelines in the industry.

Biocon Biologics enters the next stage of strategic evaluation with a strengthened financial profile and growing global scale. The company reported:

• Consolidated revenue for FY25 stood at ₹90,174 million, up 2% year-on-year.
  
• On a like-for-like basis, after excluding branded formulations and one-time income, revenue grew 15%.
  
• EBITDA increased to ₹30,274 million, reflecting a 38% growth from the previous year.
  
• EBITDA margins improved significantly from 25% to 34% in FY25.
  
• Net profit surged to ₹8,896 million, recording a 308% increase, driven by operating leverage and integration benefits.
  

The business has also attracted sustained confidence from global investors. Over the past few years, Biocon Biologics has secured equity participation from True North, Tata Capital, Goldman Sachs, ADQ, and the Serum Institute of Life Sciences, which doubled its investment to $300 million in 2023. In October 2024, the company also refinanced $1.1 billion of long-term debt through USD bonds and a new syndicated facility, reflecting strong support from international lenders and signalling healthy credit strength.

Conclusion

Biocon’s potential merger with Biocon Biologics marks a turning point in its corporate strategy. By consolidating its biosimilars business with the parent entity, the company aims to simplify its structure, strengthen its balance sheet, and enhance shareholder value.

While the final decision will depend on Morgan Stanley’s assessment, the move underscores Biocon’s intention to strike a balance between growth ambitions and financial prudence. Whether the company proceeds with a merger, IPO, or hybrid route, the outcome could redefine the future of India’s largest biosimilars franchise.

As Biocon navigates this transition, one question remains: will merging Biocon Biologics truly unlock more value than going public?

References:

Economic Times
Moneycontrol
Biocon Biologics Investor Page
Biocon Biologics Annual Report