Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA+/Stable/Crisil A1+’ ratings on the bank facilities of Biocon Ltd (Biocon; part of the Biocon group).

 

The ratings continue to reflect the group’s established position in the biopharmaceutical (biopharma) segment, diversified revenue streams and healthy pipeline of products. The ratings also benefit from the group’s proven sound operating capabilities and its average, but improving, financial risk profile. These strengths are partially offset by uncertainty regarding payoffs in the research and development (R&D) driven model for development and commercialisation of biosimilars and generics molecules. Also, the group is susceptible to regulatory uncertainties and intense competition.

 

On December 6, 2025, Biocon announced a strategic board-approved decision to fully integrate Biocon Biologics Ltd (BBL; rated ‘Crisil AA+/Stable’) as a wholly owned subsidiary. The transaction entails the acquisition of the remaining minority shareholding in BBL through a combination of equity issuance (of 17.127 crore equity shares of Biocon) and cash payouts of $400 million (~Rs 3,600 crore) and is expected to be completed by March 31, 2026. The total transaction values BBL at about $5.5 billion (~Rs 50,000 crore). Post share-swap transaction along with subsequent fund-raise, promoter shareholding in Biocon is expected at ~44.44% from 54.45% earlier, while BBL will become a 100% subsidiary of Biocon. Importantly, all put option-related obligations of Rs 1,419 crore associated with BBL, wherein investors, including Tata Capital and Activ Pine LLP, had exit rights exercisable after March 2026, will stand extinguished following completion of the transaction, thereby improving the structural clarity and removing contingent financial risks.

 

To fund the cash component of the acquisition, Biocon has approved multiple fundraising measures. The board has sanctioned raising up to Rs 4,500 crore through a qualified institutional placement (QIP) or similar instruments, with proceeds earmarked primarily for meeting cash consideration of $400 million payable to the compulsorily convertible preferences shareholder, Mylan Inc. In the interim, to ensure timely remittance, the company has also approved issuance of commercial papers aggregating up to Rs 1,800 crore, which is expected to be paid off after QIP completion.

 

Biocon reported steady consolidated performance during the first half of fiscal 2026, with revenue of Rs 8,237 crore, reflecting on-year growth of 17%. Revenue growth was driven by healthy traction in the biosimilars segment (21% on-year growth) and the generics segment (15% on-year growth), supported by new product launches, increased demand from the US market, and continued expansion across Europe and emerging markets. The research services vertical, operated through Syngene International Ltd (Syngene; rated ‘Crisil AA+/Stable/Crisil A1+’), recorded moderate growth of 6% on-year, wherein stable performance in research services partially offset the anticipated inventory correction in biologics manufacturing services. Revenue visibility remains supported by a healthy pipeline across biosimilars and generics, with a gradual ramp-up in both revenue and profitability expected at BBL as well as the generics segment. Syngene’s revenue profile continues to benefit from long-term contracts with reputed global clients and a robust order book. On an overall basis, the group expects to sustain double-digit revenue growth at the consolidated level from fiscal 2026 onwards.

 

Operating profitability remained stable during the first half of fiscal 2026, with operating margin at 19.4% compared with 19.0% in the first half of fiscal 2025, though lower than the 21.3% reported for full fiscal 2025. The operating margin was impacted by ramp-up costs linked to operationalising new facilities, though offset by recent product approvals and launches, which have begun materialising since the latter part of fiscal 2025. Crisil Ratings expects Biocon’s operating margin to improve over the next 12-18 months, driven by the ramp-up of new product launches as well as better gross margin and operating leverage.

 

Earlier, Biocon reported modest performance in fiscal 2025 with revenue registering on-year growth of 3% to Rs 15,262 crore, while consolidated earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin stood at 21.3% against 22.2% in fiscal 2024. The company achieved notable growth in its biosimilars segment (on like-for-like basis at 15%, post-sale of branded formulations business), driven by increased demand in the US and steady expansion in Europe and emerging markets, reflecting a solid market share in oncology and insulin biosimilars. The generics faced pricing pressure and demand contraction compounded by planned facility shutdown but registered strong growth in the fourth quarter of the fiscal (~46% on-year growth) led by new launches. Research services revenue, primarily through Syngene, grew at modest 4% on-year in fiscal 2025, showing signs of recovery since the second half of the fiscal, supported by increased project collaborations and investment in capacity expansion.

 

From a financial risk perspective, Biocon has taken concrete steps towards balance sheet strengthening, after contracting sizeable debt to fund the acquisition of the biosimilars business of Viatris Inc (Viatris). During the quarter ended June 30, 2025, the company successfully completed a QIP aggregating Rs 4,500 crore. Out of the total proceeds, ~Rs 2,300 crore was utilised towards debt reduction till September 30, 2025, including acquisition of optionally convertible debentures of BBL from Goldman Sachs India and repayment of commercial paper outstanding. Thereafter, Biocon has also redeemed non-convertible debentures (NCDs) issued to Kotak Investment Advisors on October 1, 2025, and has also taken board approvals for retiring NCDs and compulsorily convertible debenture (CCDs) issued to Edelweiss Alternate Asset Advisors by January 31, 2026.

 

Hence, with the balance QIP proceeds, the new QIP issuance, and the proposed equity share swap under the ongoing BBL consolidation transaction, management expects to fully retire all structured debt instruments by March 31, 2026. While total debt continued to be elevated at Rs 16,536 crore as on September 30, 2025, net debt was lower at ~Rs 10,000 crore owing to large liquidity built up through fund raise. Leverage metrics are expected to improve meaningfully with net debt to Ebitda ratio below 2.5-3.0 times over the near term (net debt to Ebitda stood at 3 times as on September 30, 2025; it stood at 4.1 times as on March 31, 2025). Any delay in execution of the proposed fund-raise, higher-than-anticipated capex, or adverse working capital movements resulting in increase in incremental debt remains a key rating sensitivity.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of Biocon and its various subsidiaries and step-down subsidiaries as all the companies, collectively referred to as the Biocon group, operate in the biopharma sector and have common management. The associates and joint ventures have been moderately consolidated to the extent of shareholding.

 

Crisil Ratings has amortised goodwill and intangibles from the acquisition of the biosimilars business of Viatris over 15 years, while the balance goodwill and intangibles (including products under development) have been amortised over five years.

 

Compulsorily convertible preference shares (CCPS) issued to Viatris and compulsorily convertible debentures issued to Edelweiss Alternate Asset Advisors Ltd (Edelweiss) have been treated as quasi equity and OCD issued to Edelweiss have been treated as debt. Barring CCPS, the remaining structured instruments are backed by pledge of predetermined number of shares of BBL.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Strong and diversified revenue streams

Revenue is diversified across generics (19% of revenue in fiscal 2025), biosimilars (58%) and contract research services (23%).

 

The generics segment reported a steady growth in the first half of fiscal 2026, driven by new product launches in the United States of America (US) and European Union (EU) and steady expansion in the base formulations and active pharmaceutical ingredient (API) businesses. Growth was supported by launches such as Liraglutide in the EU and Lenalidomide and Dasatinib in the US, alongside higher API volume. The business mix continues to tilt towards formulations, which now account for approximately 40% of generics revenue, compared with about 60% from APIs. Biocon has consolidated its position in this segment through its portfolio of differentiated APIs, including fermentation-based, synthetic, high-potent and peptides as well as vertically integrated complex formulations. Healthy growth is expected in this segment over the medium term, led by new launches including Liraglutide launch in the US (subject to approvals), and other product approvals received including injectable products such as Micafungin and Daptomycin.

 

BBL is a leader in biosimilars with several products in regulated and semi-regulated markets. As on March 31, 2025, the company had 10 approved biosimilar products. Recent approvals include Bosaya, Aukelso, Vevzuo and Evfraxy (biosimilar Denosumab), Biosimilars Kirsty (Insulin Aspart; the first interchangeable rapid-acting insulin aspart), Jobevne (biosimilar Bevacizumab) and YESINTEK (biosimilar Ustekinumab). Revenue visibility is supported by a surge in these regulatory approvals with operational risks having notably moderated following the successful resolution of the US Food and Drugs Administration (US FDA) inspections at key manufacturing facilities in Bengaluru and Malaysia, ensuring supply continuity. Biocon’s long-term growth potential will be led by its biosimilar segment. While this will require large investments for R&D and capex, the company will be supported by steady cash flow from its existing businesses.

 

Syngene is a leading contract research and manufacturing services organisation in India. It offers integrated services across the drug discovery and development value chain and provides research services in medicinal chemistry and biology to innovator pharmaceutical companies. Syngene enhances revenue diversity with sustained healthy growth and profitability. With commercialisation of the ongoing capital expenditure (capex) and ramp-up of operations, Syngene will likely sustain its operating performance and revenue contribution over the medium term.

 

Healthy pipeline of biosimilar products

The Biocon group has strong R&D capability and several biosimilars and novel biologic products in development in the diabetes, oncology and autoimmune therapeutic segments. The biosimilar assets of Biocon have received approvals from various regulators and have been launched in regulated and semi-regulated markets. Scaling up of revenue from existing key biosimilar assets and upcoming launches with improvement in profitability will be key to improvement in the business risk profile of the group, and will remain monitorable.

 

Sound operating capabilities

The Biocon group has operational track record of over four decades and is currently among the leading biopharma companies in India. Through BBL, it is among the few domestic companies to have launched biosimilar products in the regulated markets of the US and Europe. The company has become a reputed global player for statins and immunosuppressants in the generics space. Over the years, Biocon has set up and expanded manufacturing facilities at multiple locations in India and in Malaysia with healthy utilisation level. The operating margin remained high at 23–26% over the past few fiscals. While profitability was impacted in fiscal 2025 with delay in key product approvals and change in revenue profile and operating deleverage post divestment of branded formulations, with expected increase in revenue contribution from the high-margin biosimilars and contract research segments, the operating margin is expected to increase to 23-25% over the medium term.

 

Average, though improving, financial risk profile

Fresh equity raised at BBL for part funding the acquisition of the biosimilars business of Viatris substantially augmented the networth of the Biocon group and helped buttress the impact of sizeable debt raise of $1.2 billion and subsequent fund raise through structured debt instruments from Kotak Investment Advisors Ltd and Edelweiss, leading to adjusted gearing of 0.7 time as on March 31, 2025. However, moderation in operating profitability and high debt impacted debt protection metrics with net debt to Ebitda ratio at 4.1 times in fiscal 2025 (5.3 times in fiscal 2023). The company had earlier retired part of debt via proceeds from sale of some business units to Eris Lifesciences Ltd as well as through contingent consideration received from Viatris.

 

The group plans to undertake large annual organic capex of $200–250 million across different business segments. The capex plan for the generics segment includes commercialising the greenfield immunosuppressants facility in Visakhapatnam, and the non-immuno fermentation, new injectables facility, synthetic API and peptide facility in Bengaluru; BBL’s capex plans include expansion of its insulin facility in Malaysia, while Syngene will increase capacity of its research centres and manufacturing facilities in large and small molecule. The capex is likely to be majorly funded through cash accrual and liquid surplus with low reliance on external borrowing.

 

With the management’s stated intent to continue deleveraging the balance sheet, Biocon has undertaken a Rs 4,500 crore QIP during the quarter ended June 30, 2025. Out of the total proceeds, Rs 2,300 crore had been utilised towards debt reduction as on September 30, 2025, including acquisition of optionally convertible debentures of BBL from Goldman Sachs India and repayment of commercial papers. Thereafter, Biocon has also redeemed NCDs issued to Kotak Investment Advisors on October 1, 2025, and has also taken board approvals for retiring NCDs and CCDs issued to Edelweiss Alternate Asset Advisors by January 31, 2026. Furthermore, the board has sanctioned a second fund raise of up to Rs 4,500 crore through a QIP to be undertaken in the fourth quarter of fiscal 2026, with proceeds earmarked for meeting the cash consideration of $400 million payable to the compulsorily convertible preferences shareholder, Mylan Inc, and other repayments. With these initiatives, leverage metrics are expected to improve meaningfully with net debt to Ebitda ratio below 2.5-3.0 times in the near term (net debt to Ebitda stood at 3 times as on September 30, 2025). RoCE, however, is likely to improve only gradually, aligned with the ramp-up and commercialisation benefits from new product launches at BBL. Any delay in execution of the proposed second fund-raise, higher-than-anticipated capex, or adverse working capital movements resulting in incremental debt remains a key rating sensitivity.

Key Rating Drivers - Weaknesses 

Uncertainty regarding payoff in the R&D-driven model in the biosimilars business, especially in regulated markets

The group will continue to spend extensively on R&D for developing new molecules and biosimilars, particularly for the US and Europe markets. It remains exposed to long gestation period and uncertainty regarding timing and extent of returns on investments on new molecules given the nature of the drug discovery model. Net R&D (net of capitalisation) was 7.4% of revenue (excluding Syngene) in fiscal 2025 (14% in fiscal 2023 and 10.2% in fiscal 2024). While the absolute R&D expenditure will remain sizeable over the medium term, driven by expenses on clinical trials and R&D to build a robust product pipeline, net R&D as a percentage of revenue should remain at 7–9%. Uncertainties regarding revenue visibility and return on the R&D expenses expose the company to investment risk. However, the company has achieved critical milestones in the past with approvals for biosimilars and launch in regulated and semi-regulated markets in partnership with Viatris, leading to strong revenue growth. The extent of ramp-up, particularly in regulated markets, will be monitorable.

 

Susceptibility to regulatory changes and intense competition

Regulatory risks are manifested in increasing scrutiny and inspections by regulatory authorities, including the US FDA, European Medical Agency, and those in Asia and Latin America markets. Any delay in approvals can lead to loss of opportunity in the biosimilars business.

 

The group faces intense competition in the regulated markets, which is characterised by aggressive defence tactics by innovator companies through introduction of authorised generics and the presence of several cost-competitive Indian players.

 

The group's significant exposure to the US market, accounting for approximately 46% of its consolidated revenue for fiscal 2025, renders it vulnerable to regulatory changes in the region. Any alterations to regulations that may negatively impact pricing or competitiveness could have a substantial effect on Biocon's operations and financial performance and hence, remain monitorable.

Liquidity Strong

Expected cash accrual of Rs 2,500–3,000 crore in fiscal 2026 with strong liquid cash balances will comfortably cover debt obligation and capex. Financial flexibility is high with unencumbered liquid surplus of ~Rs 6,500 crore as on September 30, 2025, built through internal cash accrual as well as recent fund raise, which will be deployed towards deleveraging. On a steady state basis, Biocon is expected to maintain Rs 2,000 crore of cash at BBL.

 

During the quarter ended June 30, 2025, the company successfully completed QIP of around Rs 4,500 crore towards deleveraging (Rs 2,365 crore utilised out of Rs 4,500 crore till September 30, 2025). Thereafter, the company has also redeemed NCDs issued to Kotak Investment Advisors on October 1, 2025, and has also taken board approvals for retiring NCDs and CCDs issued to Edelweiss Alternate Asset Advisors by January 31, 2026.

 

Furthermore, the board has recently approved another QIP fund raise raising of up to Rs 4,500 crore on December 6, 2025, towards increasing its holding in BBL by acquisition of sale shares including retirement of debt obligations taken in the interim to meet cash consideration payable to Mylan, acquisition of CCDs of BBL from Edelweiss including retirement of debt obligations taken in the interim to meet cash consideration payable to Edelweiss; and for any other general corporate purposes. Successful closure of the same, with consequent utilisation towards meeting obligation will be critical.

 

Biocon had sizeable acquisition debt-related obligation in fiscals 2026 and 2027, which has reduced due to refinancing via the US$ 800 million bonds, which have a five-year bullet repayment and the US$ 320 million syndicated loan facility. Debt obligation, after refinancing and retiring of structured debt from equity raise, is moderate at ~Rs 1,550 crore over fiscals 2027 and 2028 and will be serviced from cash accrual. The deferred consideration obligation to Viatris has been settled in fiscal 2025, while minority shareholders in BBL holding put options valued at ~Rs 1,419 crore (as of March 2025) will be provided exit through the planned issuances of shares at Biocon. With this, all structured debt instruments are expected to be retired by March 31, 2026.

ESG Profile

Environment, social and governance (ESG) profile

Crisil Ratings believes the ESG profile of Biocon supports its already strong credit risk profile.

 

The pharmaceutical sector can have a significant impact on the environment on account of greenhouse gas emissions, water use and waste generation. The sector’s social impact is characterised by the impact on the health and wellbeing of consumers on account of its products and on employees and local community on account of its operations.

 

Key ESG highlights:

• Biocon Ltd (Biocon) has set a target to reduce Scope 1 and 2 emissions by ~25% by fiscal 2029 from its fiscal 2020 baseline (at the standalone level). As a part of this commitment, Biocon (at a standalone level) reported a 29% reduction in Scope 1 and 2 emissions from its fiscal 2020 base. This was mainly driven by a rise in share of renewable energy in its overall energy mix to ~63% in fiscal 2025 (compared to 30% in fiscal 2023)
• Both Biocon (at a standalone level) and its material subsidiary Biocon Biologicals Ltd (BBL) have deployed water management practices and recycled/reused ~78% and ~74% of total water withdrawal in fiscal 25, respectively. Also, all manufacturing units are zero liquid discharge facilities
• Biocon has met it target to have at least 20% women in the workforce, with women comprising of 21% of its workforce in fiscal 2025
• Turnover rate of permanent employees of Biocon rose to ~22.5% in fiscal 2025, from 18% in fiscal 2024, which is an area of improvement
• On safety aspect, it reported nil lost-time injury frequency rate and workforce fatalities in fiscal 2025 and targets to sustain zero LTIFR.
• The company has an adequate governance structure, with more than half of its Board comprising independent directors, ~33% being women directors, presence of a lead independent director, investor grievance redressal mechanism, whistle-blower policy and extensive financial and ESG related disclosures. It also has a board-level ESG committee to provide oversight and directions, and to monitor the ESG strategy and action plans

 

There is growing importance of ESG among investors and lenders. Biocon’s continued commitment to ESG principles will play a key role in enhancing stakeholder confidence and ensure ease of raising capital from markets where ESG compliance is a key factor.

Outlook Stable

Biocon will build upon its healthy market position in the biopharma sector and make efforts to improve its financial risk profile over the medium term through equity fund raising and healthy annual cash generating ability.

Rating sensitivity factors

Upward factors

• High double-digit revenue growth and sustained strong operating profitability of over 26%, leading to healthy annual cash accrual
• Faster-than-anticipated improvement in debt protection metrics supported by healthier accrual and debt reduction through equity raise

 

Downward factors

• Lower-than-expected revenue growth and drop in operating margin to below 20-22% on a sustained basis, thereby impacting cash generation
• Material moderation in debt protection metrics (for instance, net debt to Ebitda ratio remaining above 3.5-3.6 times in the near term) due to further debt-funded capex/acquisitions, or working capital cycle not improving in line with expectations

About the Company

Biocon, set up in 1978, is India’s leading biopharma company. It is fully integrated and delivers biopharma solutions ranging from discovery to development and commercialisation. It has diversified revenue streams covering biosimilars, contract research, small molecules and APIs. As of September 2025, the promoters held 54.45% stake in Biocon.

 

For the first half of fiscal 2026, the company registered revenue of Rs 8,237 crore (Rs 7,023 crore in corresponding period of the previous fiscal) with reported profit after tax of Rs 222 crore (Rs 889 crore in corresponding period of previous fiscal)

Key Financial Indicators

As on/for the period ended March 31		2025	2024
Operating income	Rs crore	15,262	14,756
Reported profit after tax (RPAT)	Rs crore	1,429	1,298
RPAT margin	%	9.4	8.8
Adjusted debt/adjusted networth*	Times	0.76	0.71
Adjusted interest coverage	Times	3.79	4.04

*Adjusted for amortisation of goodwill and intangibles; debt includes lease liabilities

Any other information: Not applicable