Biocon: rising rupee to hit margins

By Varsha Tickoo

BANGALORE (Reuters) - Biocon Ltd (BION.BO: Quote, Profile, Research, Stock Buzz), India's top biotechnology firm, expects margins to be hurt by the stronger rupee for at least another six to nine months, its Chairman and Managing Director Kiran Mazumdar-Shaw said.

"Times are tough," Mazumdar-Shaw said, speaking at the Reuters India Investment Summit in Bangalore on Thursday. "It is an absolute concern for us because certainly it means that our margins will shrink."

Mazumdar-Shaw said more than half of Biocon's revenue is in U.S. dollars. The rising rupee hit a near-decade high of 39.16 against the dollar in November.

Biocon expects revenue growth to be driven by biosimilars, copies of biotechnology drugs, and branded drugs as its revenue is pressured by lower pricing and increasing competition that is hurting its profitable cholesterol-lowering statins business.

"We believe that focusing on biosimilars will probably allow us to enjoy at least slightly better margins," Mazumdar-Shaw said. She also said the company is increasing its focus on Europe and Japan to offset the rising rupee.

The bulk of Biocon's revenue, about 75 percent, comes from its biopharmaceuticals unit, under which it sells branded and generic drugs. Contract research services currently contribute around a fourth of revenue.

Biocon's revenue has been below analysts' average estimates for the last two quarters, and for the third quarter analysts expect revenue of 2.87 billion Indian rupees ($72.93 million), according to Reuters Estimates.

FOCUS ON INSULIN  Continued...