Biocon Limited announced a strategic move to fully integrate Biocon Biologics Limited (BBL) as a wholly-owned subsidiary in a transaction valuing the biosimilars business at $5.5 billion, marking a decisive shift away from a proposed initial public offering and aimed at unlocking shareholder value, strengthening the balance sheet and accelerating growth in key therapeutic areas.
The proposed transaction, subject to shareholder and regulatory approvals, will result in Biocon Biologics becoming a wholly-owned subsidiary of Biocon, simplifying the group structure, strengthening the consolidated balance sheet and positioning the combined entity for accelerated growth in diabetes, oncology and immunology. The integration process is expected to be completed by March 31, 2026.
“An IPO would not have captured the true intrinsic worth of Biocon Biologics given prevailing debt levels,” Kiran Mazumdar-Shaw, executive chairperson, Biocon told reporters on Saturday.
Saying that their acquisition of Viatris’ global biosimilars business in 2022 was a ‘defining moment’ for Biocon Biologics, Shaw added that market perceptions around acquisition-related leverage have continued to suppress Biocon’s valuation, creating a holding company discount that does not reflect the underlying strength of the performance of Biocon Biologics.
“As a result, Biocon Biologics’ intrinsic value is not fully captured in Biocon’s market capitalisation. In such a situation, pursuing an IPO would not have been beneficial for Biocon shareholders, as the suppressed valuation would have failed to capture the true intrinsic worth of Biocon Biologics.”
In May 2025, Biocon’s board constituted a strategy committee, which appointed Morgan Stanley as an advisor to evaluate strategic options for value creation, with a mandate to protect all stakeholder interests.
The committee assessed multiple alternatives, including spinning off Biocon Biologics through a public listing and merging it back into the parent. After evaluating parameters such as strategic alignment, sector dynamics, shareholder value creation and long-term flexibility, the committee concluded that full integration through acquisition of minority stakes represented the most efficient and value-accretive option.
The decision also provides liquidity to all existing minority investors in Biocon Biologics, while offering Viatris a defined and accelerated exit through a mix of cash and equity.
About the deal
Under the integration plan, Biocon will acquire the remaining minority stakes in Biocon Biologics held by Serum Institute Life Sciences, Tata Capital Growth Fund II and Activ Pine LLP through a share swap of 70.28 Biocon shares for every 100 Biocon Biologics shares, at a share price of Rs 405.78 per Biocon share. This values Biocon Biologics at $5.5 billion.
In addition, Biocon will acquire the residual stake held by Mylan Inc. (Viatris) for a total consideration of $815 million. Of this, $400 million will be paid in cash, while the remaining $415 million will be settled through a share swap of 61.70 Biocon shares for every 100 Biocon Biologics shares, also priced at Rs 405.78 per share.
The swap ratios have been approved by Biocon’s board based on independent valuations conducted by EY.
“Full integration through acquisition of minority stakes is the most efficient and value-accretive path forward,” Shaw said adding that this merger removes the holding company discount that has historically suppressed Biocon’s valuation and masked Biocon Biologics’ intrinsic worth.
All four independent Biocon Biologics investors receive liquidity, with buy-at-risk securing a five-year accelerated liquidity event. The combined entity gains a significantly stronger balance sheet, with consolidated debt-to-Ebitda improving from 4.3x in 2020 to 2.5x as of September 2025, and this is expected to decline further in the coming quarters.
To fund the cash portion payable to Viatris, the board has cleared a plan to raise up to Rs 4,500 crore (around $500 million) via a Qualified Institutional Placement (QIP), subject to shareholder approval.
Financial reset and balance sheet impact
The integration is expected to materially improve Biocon’s financial profile and remove the holding company discount that has weighed on the parent’s valuation since the debt-funded acquisition of Viatris’ global biosimilars business in 2022.
Following that acquisition, investor concerns around leverage had led to a sharp divergence between Biocon Biologics’ operating performance and Biocon’s market valuation. Management said that as a result, the intrinsic value of Biocon Biologics was not adequately captured at the parent level, making an IPO unattractive.
Biocon’s consolidated debt-to-Ebitda ratio has improved from 4.3x in 2020, when the Viatris acquisition was executed, to 2.5x as of September 2025, and is expected to decline further in subsequent quarters.
The company has also, in recent quarters, settled its structured debt obligations with Goldman Sachs and OTAG using QIP proceeds, and has executed a separate agreement with Edelweiss. These steps are expected to lower interest costs and improve margins at Biocon Biologics, with the full financial impact to be reflected from FY27 onwards.
“This will improve Biocon Biologics’ margins going forward, and the full impact of reduced interest costs will be reflected in FY27. The merger crystallises Biocon Biologics’ valuation at $5.5 billion via the swap ratio—an outcome unlikely in an IPO scenario given prevailing debt levels,” Shaw said.
By crystallising Biocon Biologics’ valuation at $5.5 billion through a share swap, Biocon is effectively locking in a valuation that management believes would have been difficult to achieve through an IPO in the current environment, given prevailing leverage levels and market sentiment towards biopharma listings.
Leadership transitions
To oversee the integration, Biocon has constituted a Governance Council chaired by Executive Chairperson Kiran Mazumdar-Shaw, as well as a Transition and Integration Management Committee led by Shreehas Tambe, CEO and managing director of Biocon Biologics.
The integration process is expected to be completed by March 31, 2026.
Until then, Siddharth Mittal will continue as CEO & managing director of Biocon, and Shreehas Tambe will remain CEO & managing director of Biocon Biologics.
Post integration, subject to regulatory and board approvals, Tambe will take over as CEO & managing director of the combined entity, while Kedar Upadhye will assume the role of chief financial officer. Mittal will transition into a leadership role within the Biocon Group.
Strategic rationale and road ahead
The integration consolidates Biocon’s generics and biosimilars businesses across more than 120 countries, bringing together Biocon Biologics’ global commercial infrastructure and Biocon’s generics portfolio under a single balance sheet.
Biocon Biologics currently ranks among the top five global biosimilar players by revenue, with 10 commercialised biosimilars across advanced and emerging markets, and a pipeline of 20+ biosimilar assets spanning diabetes, oncology, immunology, ophthalmology and bone health.
Biocon’s generics business, meanwhile, has a portfolio of over 90 products marketed in the US, Europe and key emerging markets.
The company is positioning itself as the only global player with both biosimilar insulins and generic versions of complex peptides, including GLP-1s, a combination that gives it a differentiated foothold in the rapidly expanding diabetes and obesity segment, often referred to as the “diabesity” market.
“The combined business positions Biocon to lead in diabetes, oncology and immunology, therapeutic areas that together account for nearly 40 per cent of global pharmaceutical revenues,” Shaw said.
Management believes that a unified organisational structure, stronger cash flows and improving leverage will allow Biocon to step up investments in product development, manufacturing scale and global commercial execution, while remaining disciplined on capital allocation.
Morgan Stanley acted as exclusive financial advisor to Biocon, EY served as tax and valuation advisor, Shardul Amarchand Mangaldas & Co. was the legal advisor, and HSBC is the funding partner for the transaction.
