New Deal Between Serum Institute Of India And Biocon Covers Vaccines, Other Biotech Products

Serum Institute of India (SII), which is the manufacturer of Covid-19 vaccine Covishield, said on 17 September that the strategic agreement between biopharmaceutical company Biocon Biologics and Serum Institute Life Sciences (SILS) will help India improve its position as a global vaccine and biologics production powerhouse.

Biocon Biologics Limited (BBL), a Biocon subsidiary, announced on 16 September that it has established a strategic agreement with Serum SILS, a subsidiary of Adar Poonawalla's SII.

As per the agreement, “BBL will offer approximately 15 per cent stake to SILS, at a post-money valuation of $4.9 billion, for which it will get committed access to 100 million doses of vaccines per annum for 15 years, primarily from SILS’s upcoming vaccine facility in Pune with commercialization rights of the SILS vaccine portfolio (including COVID-19 vaccines) for global markets.”

In addition to vaccines, the collaboration will produce antibodies to fight diseases such as dengue, HIV, and others. The vaccines and antibodies will be manufactured and distributed under service level agreements (SLAs) between the two firms. In addition to vaccines, the collaboration will also help in the development of antibodies to fight diseases such as dengue, HIV and others, said the BBL press release. The vaccines and antibodies will be manufactured and distributed under SLAs between the two firms.

Vaccines are a good fit for BBL's business and add a new dimension to its efforts to improve world healthcare. Biocon Biologics has established a manufacturing and marketing cooperation for ADG20, a novel Covid antibody treatment, with Boston-based Adagio Therapeutics in key emerging markets.

After the announcement was made about the collaboration, SII’s chief executive officer Poonawala stated that “we look forward to complementing each other’s capabilities and capacities in vaccines and biologics,” intending to resolve inequitable access to life-saving vaccines and biologics in both emerging, as well as developed markets.

Biocon stated in the press release: “Both companies [SII and Biocon Biologics] believe that this is an alliance that can make a significant impact on global healthcare through vaccines and biologics".

However, the Mumbai-based Edelweiss said that this new agreement between these companies looks “optically appealing”. But according to a report by Economic Times, it noted that it is unclear what the target geographies, vaccine types and profit-sharing fine print will be.

According to the financial service company, Biocon has strategically achieved a profit share in a business in which it has little experience. It also added that “even so, we see downside to the mid-30s margin as the bulk of sales are likely to be in EMs, wherein pricing is about one-fourth of high-income countries. While our vaccine NPV analysis adds Rs 38 per share to the business, we are marking down the target price to Rs 345 from Rs 370 given the challenges in biosimilars."

Meanwhile, Motilal Oswal Securities told Economic Times the move would supplement Biocon's current product offerings. According to the financial company, "With its industry-leading capabilities in affordable Biologics, entering the vaccine segment is a natural extension to its current capabilities.” The firm also noted that Biocon will use its existing commercial strength, particularly in developing countries, to capitalise on this alliance's business opportunities.