Call Start: 23:30 January 1, 0000 ET
Biocon Ltd. ADR (OTC:BCNQY)
Q1 2019 Earnings Conference Call
July 26, 2018 11:30 PM ET
Executives
Kiran Mazumdar Shaw – Chairperson & Managing Director
Shreehas Tambe – President and Chief Operating Officer
Arun Chandavarkar – CEO & Jt. Managing Director
Saurabh Paliwal – Investor Relations
Analysts
Prakash Agarwal – Axis Capital
Damyanti Kerai – HSBC
Surya Patra – Phillip Capital.
Sameer Baisiwala – Morgan Stanley
Prashant Nair – Citigroup
Charulatha Gaidhani – Dalal & Broacha
Harith Ahamed – Spark Capital
Surajit Pal – Prabhudas Lilladher
Operator
Ladies and gentlemen, good day. And welcome to Biocon Ltd Q1, FY2019 Earnings Conference Call. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand over the conference over to Mr. Saurabh Paliwal from Biocon Investor Relations. Thank you and over to you, sir.
Saurabh Paliwal
Thank you, Aman. And good morning, ladies and gentlemen. I welcome you to Biocon’s earnings call for the first quarter of fiscal 2019.We declare results yesterday; I hope you had a chance to look at them. Before we proceed, I would like to remind everybody that a replay of today’s discussion will be available over the next few days about 60 minutes post the conclusion of this call. We will post the transcript of the call on our website in the coming days.
Moving on to discuss this quarter’s four months and outlook, we have today with us Biocon management led by Dr. Kiran Mazumdar Shaw, our Chairperson, and other colleagues from the senior management team. I would like to remind everybody that today’s discussion may have forward looking statements based on the management’s current beliefs and expectations. They must be viewed in conjunction with the risks that our business faces that could cause our future results, performance or achievements to differ significantly from that what is expressed or implied by such forward-looking statements.
After the end of this call, if you need any further information or clarifications, please do get in touch with us.
With this, I would like to turn the call over to Dr. Kiran Mazumdar. Over to you, ma’am.
Kiran Mazumdar Shaw
Thank you, Saurabh. Good morning, everyone. I welcome you to Biocon’s earnings call for the first quarter of fiscal year 2018-19. Let me start with key highlights for the quarter. I’m pleased to share that our partnered biosimilar Pegfilgrastim, Fulphila received approval from the US FDA last month. Our partner Mylan has launched the product in the US as more affordable therapy option for cancer patients undergoing chemotherapy.
It is indeed a significant milestone for Biocon and sets the tone for the future success of our biosimilar’ business. Very few companies have received two biosimilar approvals from the US FDA, and we are very proud of this achievement. It makes us, as I said the first company from India to get this biosimilar commercialized in the US, and we are certainly as I mentioned earlier, the only company from India to have two of its biosimilars approved by the US FDA.
Biocon Sterile Drug product manufacturing facility for biologics in Bengaluru received EIR from US FDA and the EU GMP certification during the quarter. We presented PK-PD data on our novel Insulin Tregopilat American Diabetes Association Scientific sessions in the US. And Syngene extended and expanded their agreement with the Baxter global R&D center until 2024.
Now moving on, I will present the key financial highlights for this quarter. Total consolidated revenues for the quarter were Rs 1,193 Crores, up 21% compared to last year. Revenue from operations was Rs 1,124 Crores which were up 20% as compared to last year. This includes licensing income of Rs 5 Crores this quarter as compared to Rs 8 Crores in Q1 of last year.
From a segment perspective, Small Molecules –the segment revenue was up 10% to Rs 400 Crores. Biologics grew 36% to Rs 250 Crores and Branded Formulations grew 13% to Rs 147 Crores. Syngene revenues were up 39% at Rs 406 Crores in Q1. We incurred gross spend of Rs 88 Crores on R&D this quarter corresponding to 12% of revenues excluding Syngene. Of this amount Rs 44 Crores is reported in the P&L. We capitalized an amount of approximately Rs 44 Crores related to our biosimilars and insulin analogs development expenses.
The gross spent are lower than last year due to timing of some of the activities on a quarterly basis. The amount in the P&L has reduced on account of capitalization of bevacizumab related expenses, which we had reflected in the P&L in Q1 of last year.
We booked a FOREX gain of Rs 39 Crores this quarter compared to Rs 17 Crores in Q1 of last year. This gain is reflected in the other income line of the P&L. Of the total amount Rs 28 Crores is coming from Biocon while the rest is attributable to Syngene. Group EBITDA grew 25% to Rs 307 Crores with EBITDA margins at 26%. Core margins that are EBITDA margins net of licensing impact of FOREX and R&D stood at 27%.
Reported net profits were up 47% this quarter at Rs 120 Crores, which represents a net profit margin of 10%. The effective tax rate at 27% for quarter is slightly lower than last year of 28% due to lower losses and overseas subsidiaries during the period under review.
Coming to discussing individual business segments. Small Molecules, the revenue growth in this segment was led by key APIs and increased generic formulation sales. Higher sales of immunosuppressant and increased market share of Rosuvastatin formulation in the US were key contributors. We also launched Simvastatin tablets in the U.S. market during the quarter. Several Drug Master Files were filed in development and key emerging market during the quarter, strengthening our Small Molecule APIs pipeline.
Now coming to Biologics. This segment was led by higher sales of biosimilar monoclonal antibodies in emerging markets, supported by Insulin business. The primary driver for growth this quarter was Trastuzumab with strong retail market uptake witnessed in Brazil. And robust market share in certain markets IN LATAM region.
Our Insulin’s portfolio continued to improve its market share in several emerging markets, clearly, we are seeing a strong uptick of our biosimilars portfolio products in emerging markets, and which enjoy wide acceptance from patients and prescribers. With a strong start in the year and several regulatory submissions made in emerging market recently, we expect a further pick up in the biologics business growth in the coming quarters.
The recent launch of Pegfilgrastim by our partner Mylan in the US, and Insulin Glargine sales in EU and Australia, which are planned for later this fiscal, are expected to provide a further tailwind to this segment performance. We remain confident of achieving the $200 million target revenue for this segment in FY2019.
In Q1, the growth in Branded Formulation Segment which comprises products sales in India and UAE was led by growth in the India branded formulations business. The India business growth this quarter benefited from the lower base last year in the same quarter due GST implementation. Metabolics, Nephrology, Immunotherapy and Comprehensive Care divisions aided the business performance with strong growth reported for some of our key brands.
In the UAE, the business continued to garner market share in the Metabolics segment through increased sale of in licensed products of our Insulin Glargine which was introduced recently. In terms of research services, Syngene recorded strong growth this quarter. The growth was driven by good performances within biologics manufacturing discovery services and Canmab services.
Syngene also announced the extension and expansion of their agreement with the Baxter global R&D center until 2024. They also announced the re-commissioning of Phase 1 of the upgraded S2 facility which was damaged due to a fire incident in December 2016. The progress made provide good visibility on underlying growth expectations for Syngene for this year and the long term.
Now for some product development update. In Europe, the regulatory review of our marketing authorization applications or NAA for biosimilar trastuzumab and Pegfilgrastim are progressing well, and we expect a decision by CHMP by the end of calendar year 2018. For the US market, Biocon and Mylan are generating additional clinical data for Insulin Glargine in support of the manufacturing side changed from Bengaluru to Malaysia. All activities as agreed with the US FDA in this regard are progressing as planned.
We will expeditiously provide the requested data to the regulator in response to the complete response letter we received for this product. We do not anticipate any impact on the approval and launch timing of Insulin Glargine in the US. As part of our novel molecule portfolio development program for Insulin Tregopil, our oral insulin candidate, Insulin Tregopil advanced in pivotal phase 2, phase 3study in type 2 diabetes with more patients in India being randomized during the quarter.
Before I conclude I would like to summarize our performance in Q1, FY2019 and the expectations for the rest of the financial year. We have had a positive start to the year with a good performance in the first quarter. We were able to increase sales in the small molecule segment despite challenges persisting in the generics industry. Branded formulations also grew in double digits, and we expect a better performance from this segment this year.
The growth segments namely Biologics and Syngene have made a strong start building upon the traction from last quarter. Recent and upcoming launches of biosimilar seminars coupled with traction in research services provides us a good launch pad to accelerate growth in the subsequent quarters during this financial year. We have positive expectations on our overall performance this fiscal.
With this, I would like to open it up for question-and-answers. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions]
The first question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.
Prakash Agarwal
Yes, thanks for the opportunity and congratulations on a very good set of numbers. Just trying to understand this R&D line better, we had earlier talked about Rs 4.5 billion to Rs 5 billion kind of run rate. We tagged lower as per the quarterly run rate is concerned. So how should we think about for the full year? Is there any change?
Unidentified Company Representative
No change in the R&D guidance. So it could be in the range of Rs 4.5 billion to Rs 5 billion range, and as we said this can’t be even throughout the quarters. This quarter at the gross level it was Rs 88 Crores and we definitely expect the expenses to go up in the coming quarters.
Prakash Agarwal
Perfect, great. And secondly on Fulphila, again congrats on launching it as well, just trying to understand this in terms of ramp up how should we think about the acceptance and the ramping up of the product? What are the initial feelers if you could share?
Unidentified Company Representative
Sure. I think certainly we are looking forward to this launch. We’re excited about this product going forward. And we look forward to seeing how it develops. I think it’s –it’s too early to speculate at this time. And about specific market shares that we are targeting.
Prakash Agarwal
Okay and would the sales of Fulphila be recorded in the current quarter? I mean Q1, there is some impact, and I mean I understand profit share would obviously come later, but would the manufacturing sales –would have gone?
Unidentified Company Representative
Maybe small number, Prakash, not a big number, but yes there is of the launch quantities were included in this quarters number.
Prakash Agarwal
Okay and from here obviously it would ramp up more.
Unidentified Company Representative
Yes and more importantly, the profit sharing would start coming as Mylan starts recreating the inventory in the markets.
Prakash Agarwal
With a quarter lacks, would that be right to understand?
Unidentified Company Representative
Yes. I mean that would be fair. Given the initial launch, I mean for the inventory — they maintain — obviously there will be no profits on that, but for the initial launch quantity, I don’t think there will be a big lag. So we will expect whatever call initial sales they will do and the quarter two, the profits will be captured in quarter two.
Prakash Agarwal
Understood, fair enough. And secondly on Glargine, just looking at clinic trials website, so talks about completion of additional clinical data by December 2018. So post which in terms of timelines we would be looking to submit the data and should we expect calendar 2019 as the approval?
Unidentified Company Representative
See we have litigation on this product, and as you know this is under 505B2 took 30 months stay which expires in –it gets over in March 2020, so what we said is that we expect to get approval before March 2020. And because of the litigation even if the final approval will not come until –till the 30 months over or the litigation has –
Prakash Agarwal
Yes. That I understand. I just understanding with the clinical trial data being completed, would it be fair to see an approval by 2019 is what I am trying to understand.
Unidentified Company Representative
No. As Siddharth mentioned, the approvals are linked to the whole 505B2 patent litigation. The 30 months stay. So that what drives some of the clock, but from our side, clearly, you can see that the trials are going on track. And we’ve also in current — so clearly marks will guide saying that we are on track in terms of approvals and launch in the US.
Prakash Agarwal
Understood, fair enough. And lastly on the cash pile, given we had some stake sales on Syngene what will the cash position and the CapEx for the quarter, sir?
Unidentified Company Representative
It will — is roughly Rs 2,100 Crores with a debt of Rs 2,500 Crores. So the net position is roughly Rs 300 Crores. So the cash what we collected from sale of Syngene stake was roughly Rs 340 Crores. And then we had CapEx at the group level of almost of similar amount. So compared to much cash position remains unchanged.
Prakash Agarwal
Okay, CapEx is around, sir, for the quarter, Rs 300 Crores?
Unidentified Company Representative
Rs 340 Crores
Prakash Agarwal
Okay. This is for the full year; I am asking for the quarter?
Unidentified Company Representative
I’m telling for the quarter.
Prakash Agarwal
Rs 340 Crores, okay. Thank you so much.
Unidentified Company Representative
Syngene combined.
Operator
Thank you. The next question is from the line of Damyanti Kerai from HSBC. Please go ahead.
Damyanti Kerai
Hi, thank you for the opportunity. So congratulations for launch of Fulphila in the US. So can you broadly indicated what discounts, price discounts were referenced, projects we have launched starting the market?
Unidentified Company Representative
Sure. I think it’s been indicated in the press and Mylan is too confirmed also about the 33% discount in the list price, the wack price in the market. So that’s the information available at this time.
Damyanti Kerai
Okay, thanks for that. Coming to Insulin Glargine, you have indicated that we have done really well in Brazil, but can you also indicate how we have done so far in Japan in terms of like what kind of market share or sales we have garnered so far?
Unidentified Company Representative
So in Japan I think our launch there was after a prior launch of biosimilar there. And so this has not been a big market for us so far. But we continue to watch and work with the partner to see how this evolves.
Damyanti Kerai
Okay, thank you. And final question from my side. Can you indicate how much R&D we have cumulatively capitalized so far?
Unidentified Company Representative
Yes, just give me a second. It’s around Rs 500 odd Crores.
Damyanti Kerai
Rs 500 Crores cumulatively. Okay, thank you very much.
Unidentified Company Representative
That also includes the amount for internal capitalization as well as amount paid out to in licensed –the [Indiscernible] molecules that Mylan partnered with SKB.
Damyanti Kerai
Sorry. Can you come again on that? I could not get it. It’s for internal capitalization as well as for –?
Unidentified Company Representative
For any intangibles that we acquire. So the total amount is Rs 500 Crores.
Operator
Thank you. The next question is from the line Surya Patra from Phillip Capital. Please go ahead.
Surya Patra
Yes, congratulations for the launch of Fulphila in US. And so just on the ramp side for Fulphila, it would be very, very saddle or how it could be actually that one could really see and what is the likelihood of competition there for Fulphila? What sense that you can provide?
Unidentified Company Representative
Sure. We’ve seen that different trajectories for different products in the US market, and generally there is a gradual ramp up in the US market with the biosimilar launches there. So that’s the kind of the backdrop with other products that we’ll be looking at in comparison to our launch. In terms of competitors, we are expecting [Indiscernible] has their action date on November 3rd. So we do you know that one is on the horizon, others are further –are beyond that time. And I don’t think there’s as much specifics on their entry time.
Surya Patra
Okay, initially it would be one to two players’ kind of scenario, and with the similar kind of the initial price trend what we have witnessed, could be sustaining for the relatively longer time? Is that assessment –is fair?
Unidentified Company Representative
Sorry. Can you repeat the question please?
Surya Patra
So that means it would be initially selected means very, very less competitive kind of space with 30% to 40% kind of price discount scenario would be prevailing in the initial phase of –?
Unidentified Company Representative
Yes. I mean I think that initial wack price discount had been announced, and that’s what it is at this point. I think wouldn’t be appropriate to talk about the competitive strategy or speculate about how that evolves.
Surya Patra
Right. In terms — two things — the two products which is already been though it is our partner product but in the meanwhile to accelerate the launch of the products in European markets for Trastuzumab and Itolizumab, Mylan has partnered with third parties. So how the economic interests are are getting protected? Can you just provide some ideal about it? And so –and also what is the kind of progress that we are seeing for the balance pipeline?
Unidentified Company Representative
So let me take the first question, and I think and then handover to my colleagues to answer the pipeline question. But on the first question what expect is that whatever is the profits from these in licensed products, Mylan will get — will be shared with us in line with original agreement. So for the developed markets, as you know we have a profit share which is different from the emerging markets, and the same ratios would be applied to profits in the developed market, as well as emerging market.
Surya Patra
Okay. And this would be exclusive to Europe as of now and US plans will be with our own product only that is how one should really views it.
Unidentified Company Representative
Well, right now, Mylan has announced for Europe and I can’t comment anything more than that. I think there are certain emerging markets also include.
Surya Patra
Yes, okay.
Unidentified Company Representative
On the development pipeline.
Shreehas Tambe
So, Surya, this is Shreehas here. On the pipeline perspective, I think we’ve already guided on in terms of how our products are progressing, particularly on the clinical development of the Trastuzumab. We progress the molecule into Phase 3 global clinical trial. And we’ve also progressed on insulin analog as part through the Phase 1 clinical studies, and that’s we are at — where we are at with that. And then there are series of products which we’ve listed even in our annual report which we believe will be moving through the clinical developments as per our plan.
Surya Patra
In regards to Sandoz and our association whether we have started R&D on that front? Whether the numbers relating to the R&D spent numbers relating to that is already been started flowing to —
Unidentified Company Representative
Yes. Numbers do include a very small component of Sandoz collaboration for R&D.
Surya Patra
Okay. Just one more question, sir, on the similar setting though, we have launch product recently and after possibly seeing all possible kind of price competition, the scenario in US, so now at this juncture still this product seems to be a kind of a profitable one and possibly because of our integrated status. So can you give some sense what is the kind of a profitability that one can really see or visualize for late entry product?
Unidentified Company Representative
We cannot give details of profit but reckless to say that we obviously –it’s our second India launched in the US after Rosuvastatin. And I think more than the profit I think, we definitely making inroads into the US that’s more important, that’s also helping us set up base for our future India launches. But the products still gives a profit. I mean it is a profitable product, and in fact the API also is profitable and ANB is profitable.
Operator
Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead.
Sameer Baisiwala
Thanks, and big congrats on Fulphila, great job. Just on this you mentioned 33% less price wack, but how would it be gross to net? Would it be — would the rebates be out of ordinary or much what we see in the industry?
Unidentified Company Representative
Sure, thanks for the question, Sameer. I think that level of detail in –about rebates I think it’s not something that we’ll be able to get into here.
Sameer Baisiwala
Okay, no problem. And you mentioned that they were quite a few DMS filed in Q1. Would this be for your API business or would you be the formulator for these products? How should we think about your new DMS?
Unidentified Company Representative
API, Sameer, not for — not the India side.
Sameer Baisiwala
Okay, great. And thoughts on the approval on the launch timelines for Glargine for Europe?
Unidentified Company Representative
By end of this year, I think Mylan has already communicated in their earnings call that they plan to launch the product by end of this calendar year.
Sameer Baisiwala
Okay, great, and just from as part I thought it’s in Phase 3 right now. I mean at Mylan’s site says that. You mentioned as what is in phase one.
Unidentified Company Representative
No, Sameer, I think we just completed our Phase 1 study and we will be initiating the Phase 3 study shortly,
Sameer Baisiwala
Okay and how much time do you think would this study take?
Unidentified Company Representative
We will be in discussions with the agency to see how we can work this through, but we believe that it would be subject to the scientific advice that we receive from the agency.
Sameer Baisiwala
Sorry, can you say the last thing?
Unidentified Company Representative
We basically are discussing with the agency to see if we could work through an abbreviated path on that study, but otherwise we would probably see a typical study take anywhere close to 24 months.
Sameer Baisiwala
Okay, good, just one final question from my side. And that’s on your fiscal 2018 biologics guidance of $200 million. If I remember correctly, you had earlier occasion mentioned that most of this would be coming from emerging markets. So all these launches that we are now seeing in the regulated markets, and I think there would be at least two, three of them, would be over and about that?
Unidentified Company Representative
Well, all that we can say as we are maintaining our guidance of $200 million. It would definitely include some numbers coming from developed markets. So we do not expect the numbers to increase too significantly. And that is what we were guiding for year that it would be initial launch quantities, and given that the penetration in the developed markets would take time. We did not anticipate a significant contribution coming from developed markets in $200 million.
Sameer Baisiwala
And that still remains, is it?
Unidentified Company Representative
Well, let’s put it this way, Sameer, I mean I think we are confident now of delivering on the $200 million. And upside is obviously welcome.
Operator
Thank you. The next question is from the line of Prashant Nair from Citigroup. Please go ahead.
Prashant Nair
Yes. Good morning. My first question is just to reconfirm so this $200 million sales guidance does it include the biosimilars you’re selling in India or does that get captured separately?
Unidentified Company Representative
So that $200 million is excluding India; that is only third-party same. So India revenues are captured in the branded formulations.
Prashant Nair
Okay, fine. Secondly, this is on Glargine launch plan in Europe, would this be across markets up front or would it be a staggered launch? And, if so, then which countries do you plan to launch in first?
Unidentified Company Representative
So, Prashant, probably best directed to Mylan and they were probably this piece for the collaboration, but having said that, I think clearly there would be an approach and how we would commercialize in the European market and we will probably reveal through Mylan as we go along.
Prashant Nair
Fair enough and final question from me, so does the US launch of Fulphila trigger some amortization of the capitalized R&D?
Unidentified Company Representative
So, Prashant, we are not capitalizing anything for Fulphila, amount, we have capitalized so far for Trastuzumab, Glargine and bevacizumab. So all expenses for pegfilgrastim return off from P&L.
Operator
Thank you. The next question is from the line Charulatha Gaidhani from Dalal & Broacha. Please go ahead.
Charulatha Gaidhani
Hi, congrats on the good set of numbers. I wanted your view on the small molecules ramp up. Is this sustainable or is it one-off?
Unidentified Company Representative
So the revenues are sustainable, and I think we had a good quarter definitely. And we think that on a go-forward basis our numbers are sustainable.
Charulatha Gaidhani
Okay. Even in the profitability?
Unidentified Company Representative
Largely, I would say yes. Because we have had more R&D expenses for R&D this quarter, as we ramp up or we have some in the expansion on go-forward basis profitability for the segment will have an impact of that.
Charulatha Gaidhani
Okay. And my second question pertains to branded foundations that also has seen healthy ramp up. You think that will be sustainable?
Unidentified Company Representative
Yes. That will be sustainable because we have seen consolidation in the top products and an improvement in the profit mix as well. So product mix as well, so this –and has come with some increase in market share these products as well, so we see its sustaining in the month ahead.
Operator
Thank you. The next question is from the line of Brijesh Kasariya from Mili Asset [Indiscernible]. Please go ahead.
Unidentified Analyst
Hello. Yes, congratulation on Fulphila launch –just couple of questions. One on bevacizumab, just correct me if I’m wrong. There was a patent litigation that was filed by Amgen. Is that litigation still on and what is the status — so are we launching this at risk?
Unidentified Company Representative
So we cannot comment on this.
Unidentified Analyst
So is a patent litigation on, if we could help me understand.
Unidentified Company Representative
Yes. That’s on.
Unidentified Analyst
That’s on, right. Secondly on your guidance of this $200 million, which you said you — you’re on track on achieving that. Just one question on this going forward, so now we are — if I assume that we are at around $200 million by FY2019, going forward what is the kind of revenue or — or which would be –which we would be happy achieving say next four-five from the biosimilar pipeline that we have including the Mylan and if at all Sandoz also get commercialized over that period of time?
Unidentified Company Representative
So yes we have not given guidance beyond FY2019. I would encourage you to read couple of sale site reports who have their own assumptions and the numbers for FY20-21.
Operator
Thank you. The next question is from the line Harith Ahamed from Spark Capital. Please go ahead.
Harith Ahamed
Hi, good morning. Thanks for taking my question. The EIR for your drug product facility in Bangalore and the clearance from the EU regulator as well for the facility. Does it cover the drug substance facility as well? And what is — if not, what is the status of the drug system facility in Bangalore?
Unidentified Company Representative
All our facilities in Bangalore have the approval from the FDA and EU. All our biologics for key drug [Indiscernible]
Harith Ahamed
Okay. Thanks. Where do the segment, break up of revenues from a quarter. There is an increase in the inter segment sales. So that around Rs 80 Crores and the signs we’ve seen in recent quarters. So what exactly this and between which segments is the sales?
Unidentified Company Representative
So it would be still mainly from research services to biologics, offset of this would be deflected in — numbers.
Harith Ahamed
Okay. And in your notes to account –a note on incremental deferred revenue that you have in line in a balance sheet balancing — and what is the offsetting entry for this and can you give more color on this?
Unidentified Company Representative
Yes. So you might be aware that as far have changed the revenue standard globally and in line the change Indian — India is also mandatory required to adopt to the new accounting standard and revenue recognition that India’s 115 and pursuant to that all our revenue contracts have to be reassessed. See traditionally all our licensing income was recognized as and when we had on the revenues. However, under the new accounting standards we are required to recognize the license income only once the product is launched. And hence that is — the recognition of Rs 185 Crores of revenue and which was spoken deferred revenue line which will be recognized over a period of time as we get the product approvals. So as partners get the product approvals.
And that will also by the way change the way we recognize licensing revenues in the future because as I mentioned till March 2018 the licensing revenues were basically accrued under book as and when we invoice it to our customers on a go-forward basis whenever we earn the licensing upfront, we will have to amortize that over a period of time.
Harith Ahamed
Okay. And so increasing deferred revenue is by how much, what will be incremental change?
Unidentified Company Representative
It’s Rs 185 Crores is the amount that has been put in the balance sheet.
Harith Ahamed
Okay. And last one if I may on the other income. Those are higher other income for the quarter of Rs 48 Crores. So anything — can you provide a breakup of this?
Unidentified Company Representative
So FOREX gain is the main reason for the increase. So out of Rs 69 Crores, Rs 39 Crores is FOREX.
Operator
Thank you. The next question from the line of Surajit Pal from Prabhudas Lilladher. Please go ahead.
Surajit Pal
Hi, congratulations for your first Biocon launch in US. My question is that the result of launch of Biocon vis-à-vis the market share has some mixed research. So for example you’ve Remicade is a big product and what we found out is that despite having three biosim, the same the original [Technical Difficulty] if those scenario could come through even to your product, which you have launched or which you are planning to launch. What could be marketing strategy?
Unidentified Company Representative
Yes. Thanks for that question. Definitely the dynamics here are complicated. I think FDA commissioner has spoken out about some of these dynamics recently as well. And they seem to be wanting to take action there. One thing I would add for perspective is that while some of these ramp ups are gradual, the sales numbers reported by Pfizer so far are pretty meaningful. They’re not negligible numbers so far. I think I’ve seen $50 million for a quarter. So they’re not negligible even with these market shares. So I think there’s a trade-off that’s going on there, and there are product specific dynamics.
In terms of the way that Mylan approaches this and how they –what particular strategies they take, I think they will be best place to comment on it, and certainly it’s sensitive information at this stage.
Surajit Pal
My point was actually is that if biosimilar guys got frustrated in terms of slow progression of market share is there any possibility like sharp correction like what Mylan did in copaxone? Similar kind of illusion like say 40%, 50% or 60% straight away so that we could grab them in the market share, and that could be replicated by the other competitors also. So ultimately the kind of big investment made by the biosim guys might be falling short in terms of recovering.
Unidentified Company Representative
Sure, obviously, we are confident in our ability to monetize our investment. And for that this is a worthwhile market, but I think we won’t comment further on the pricing dynamics.
Surajit Pal
Okay. Second question is that where Biocon does stands in terms of their filing in copaxone because last time there were some queries, we had an update, after that what happened? Is there any progress to that?
Unidentified Company Representative
Yes. So we made substantial progress in terms of preparing our response to the FDA, and while we can’t be specific in terms of the timing, we are well advanced in terms of preparing our –to gathering the necessary information for our response.
Surajit Pal
So do we expect further queries to come after that or you believe that this is the last?
Unidentified Company Representative
I can’t speak on behalf of the agency.
Surajit Pal
No. I mean because since you have done it so you and others also have done it, so do you think that there is a possibility, and that’s my point.
Unidentified Company Representative
Well we have tried to prepare as comprehensive response as we can. That’s why it’s taken us time.
Operator
Thank you. The next question from the line Hem Agarwal, an individual investor. Please go ahead.
Unidentified Analyst
Yes, good morning. And, madam, many congratulations on being selected on the Board of Trustees of MIT. I have a question– so I have a couple of questions. One on the annual report on page 8, it says about Trastuzumab that 25% of the nearly 2 million women diagnosed there they had that HER2 positive tumors. What percentage of these women uses the class 2 treatment? Or use the biosimilar treatment?
Kiran Mazumdar Shaw
As you know, we are yet to launch our biosimilar Trastuzumab in the developed markets. And our biosimilar trastuzumab is certainly expanding the patient access in the developing world market. So we are present in many, many emerging markets. And as you know in India itself, we have more than doubled the access to this drug because of cost. So we expect that this is something that will play a very strong role in providing affordable access to this life-saving drug. You’re very right in asking that question as to how many of these patients actually can afford this drug. And in most of the emerging markets up until Biocon and a few other biosimilars companies were able to offer this drug, I can tell you the access was very, very limited.
In India itself, we are seeing a very, very rapid expansion of this particular drug to many, many patients who need it. So we are sure that like if we have done in many, many other segments, like for instance insulin therapy we have more than expanded this market in terms of volume almost tenfold times thanks to all the access that have diabetics have got to this drug.
Similarly, we think that even for these cancer drugs which were only available to a few patients. We believe that we can actually have a multifold expansion in terms of patient access. So that is what we are committed to. As you know, that is what Biocon has been focused on. That is our purposeful mission that we are on, and that’s what we will stay committed on.
Unidentified Analyst
And how about in the developed market. What percentage of the women in the developed markets adopts this biosimilar treatment in biologics?
Kiran Mazumdar Shaw
So this is a gold standard in any case. So anyone who has HER2 plus treatment will be given this drug. So it is a standard protocol that is adopted in the developed world, but as you know, it is also something which is spiraling their healthcare costs. And therefore they are all very keen on getting biosimilar to bring down those costs, when it is a gold standard and they have to give it to patients, they are looking for biosimilars to bring down these costs. And recently the FDA Commissioner actually made a very strong case for why biosimilars should be basically adopted more expeditiously than people than its being seen.
Operator
I’m sorry Mr. Agarwal; we were unable to hear you. I think there is no response from the line. We’ll take last question from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead.
Sameer Baisiwala
Hi, thanks. Any update on a BBN, the business restructuring that was being planned?
Unidentified Company Representative
No, date, Sameer. We have applied for government approval. We await approval. The merger process has started for BRM and BBN.
Sameer Baisiwala
Okay. And at some point in time in future, say over 12 months you plan to list biosimilar as a separate business, and that thought process continuous.
Unidentified Company Representative
Well, there’s no fixed thought process. On that we said we keep on the MMP restructured in a way that if you have to unlock the value and monetize any of our assets, we can do it at an opportune time and listing is one of the options.
Sameer Baisiwala
Okay, great. And, Arun, just specifically on copaxone, so when do you plan to re-file?
Arun Chandavarkar
Sameer, I’m not giving a specific timeline this time because last time we did commit to a timeline and took us longer than that. So in response to our previous question, I just said that we are trying to prepare a comprehensive response to the queries we received. And we are well advance in terms of compiling all the necessary data that was requested.
Sameer Baisiwala
It would be this calendar year. Would that be fair?
Arun Chandavarkar
Don’t want to comment but yes we had looking at this fiscal is for sure.
Sameer Baisiwala
Okay. And on Fulphila. You mentioned [Indiscernible] in November, but any thoughts on Apotex because of the private company we haven’t seen much on that. So do you expect them to launch in the foreseeable future?
Arun Chandavarkar
So, Sameer, I won’t want to comment on where our competitors stand because if you look at Beckford last time, say two years ago, we were behind in the queue and now we are actually the first to get approval and launch the product. So I think what Paul was alluding to was not the specific competitors. But more to the fact that we have our eyes wide open that competition will follow.
Sameer Baisiwala
Okay, no, that’s fine. And just one final question. I think on Malaysian side, what could be the OPEX, this year, do you think that it would be a better breakeven this year right?
Unidentified Company Representative
Yes. I think that’s what we guided in April that we expect an EBITDA breakeven this year. We actually expect a breakeven, the EBITDA I didn’t mention. I think it was breakeven for Malaysia, and the operating expenses were roughly $50 million.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Saurabh Paliwal for closing comments. Thank you and over to you, sir.
Saurabh Paliwal
Thank you everyone for joining us today. If you have any further queries or questions, please do get in touch with me. Have great rest of the day.
Operator
Thank you very much. Ladies and gentlemen, on behalf of Biocon Limited, that concludes this conference. Thank you all for joining us. And you may now disconnect your line.
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