13 Jan , 2025 By : Debdeep Gupta
Shares of Biocon soared over 4 percent on January 13 after the US Food and Drug Administration cleared the arm of Biocon Biologics' insulin facility in Malaysia, putting an end to a major regulatory bottleneck for the company.
At 09.26 am, shares of Biocon were trading at Rs 372.70 on the NSE.
The US drug regulator classified the Malaysian unit as a "Voluntary Action Indicated" (VAI), opening the doors for the company to go ahead and file products from that facility.
This comes after the unit was slapped with an Official Action Indicated (OAI) status in October 2023. Not just that, the facility also received five observations when the US regulator inspected it last September.
The FDA’s VAI classification indicates minor, non-critical issues that do not require further regulatory action, allowing the facility to continue operations smoothly. In contrast, an OAI classification signals serious violations, such as GMP non-compliance, potentially leading to warning letters, import alerts, or withheld approvals. The facility must rectify these issues and undergo reinspection to resolve the status.
Hence, the clearance of the Malaysian unit from its previous OAI status to now a VAI classification put an end to Biocon's regulatory struggles and also cleared the path for the approval and launch of insulin biosimilar drug Aspart.
Following the development, brokerage firm Bank of America Securities raised its price target for Biocon by nearly 9 percent to Rs 435, retaining its 'buy' call on the stock. The brokerage stated that the clearance of Biocon's major manufacturing sites in Bengaluru and Malaysia lifts confidence in the upcoming biosimilar launch pipeline.
The USFDA had granted a VAI status to Biocon Biologics' Bengaluru unit back in November 2024, following which, the focus shifted towards the regulatory clearance for the Malaysian unit.
Meanwhile, Bank of America Securities also pegged an increase in annualized revenue from $1 billion in the first half of FY25 to $1.2 billion in FY26. Looking ahead, the brokerage feels that the focus will now shift towards deleveraging and new launch performances for Biocon.
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