Shares of Biocon surged over 7% in early trade on January 7, following an upgrade from international brokerage Jefferies.
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The firm raised its rating on Biocon to ‘underperform’ and increased its target price by 43% to Rs 400, citing positive developments around the regulatory approval of the company’s manufacturing facility in Bengaluru.
The new target price suggests an upside potential of approximately 12% from Monday’s closing price. At 10:45 am, Biocon shares were trading 7.22% higher at Rs 384.50 on the Bombay Stock Exchange (BSE).
The key trigger for the rally was the US Food and Drug Administration’s (US FDA) approval of Biocon’s biologics unit in Bengaluru, which received a “Voluntary Action Indicated” (VAI) status.
The VAI classification signals that while minor issues were noted during the inspection, they do not require further regulatory actions. The development clears the path for Biocon to continue its operations without any disruptions.
Investors now turn their focus to the regulatory approval process for Biocon’s Malaysia manufacturing unit, which remains a critical factor for the company’s growth outlook.
BIOSIMILAR STELARA BOOST
In addition to the Bengaluru unit approval, Jefferies highlighted Biocon’s recent milestone in securing US FDA approval for its biosimilar version of Janssen’s Stelara, a top-selling drug used to treat autoimmune disorders.
Biocon plans to launch the biosimilar, branded as Yesintek, in February 2025. Stelara generated $7 billion in US sales in 2023, and Biocon aims to tap into this lucrative market.
While competition in the biosimilar space is intense, with five other FDA-approved versions expected to launch in FY25, Jefferies sees strong growth potential for Biocon’s biologics business. Analysts believe the Stelara biosimilar approval significantly enhances Biocon’s revenue and profitability visibility.
With these developments, Biocon can capitalise on regulatory clearances and expand its biologics portfolio, driving investor confidence and fuelling the stock’s upward momentum.
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