The two biotech companies have joined hands to leverage each other’s complementary strengths and resources in biologics and vaccines to tap opportunities in the global healthcare market and address issues around vaccine inequity.

Biocon Biologics, a subsidiary of Biocon, and Serum Institute Life Sciences (SILS), an arm of Adar Poonawalla’s Serum Institute of India (SII), announced a strategic alliance on Friday. Under the terms of agreement, Biocon Biologics will offer approximately 15% stake in the company to Serum at a post-money valuation of $4.9 billion.

In return, Biocon Biologics will get access to 100 million doses of vaccines per annum for 15 years. Biocon will have the commercialisation rights of the SILS vaccine portfolio that starts with the Covid-19 vaccines – both Covishield and Novavax – and whatever new vaccines get commercialised. Poonawalla will get a seat on the board of Biocon Biologics. As per the terms, Biocon Biologics will generate a committed revenue stream and related margins, commencing from the second half of FY23.

The two biotech companies have joined hands to leverage each other’s complementary strengths and resources in biologics and vaccines to tap opportunities in the global healthcare market and address issues around vaccine inequity. The alliance will address the raw material availability challenge for manufacturing vaccines in the country.

On the anvil are plans to invest in the critical supply chain for inputs such as resins, media, chemicals, biobags and reusables to reduce the country’s dependency on external vendors. Plans are afoot to develop antibodies targeting several infectious diseases like dengue and HIV. Both companies will enter service-level agreements to manufacture and distribute vaccines and antibodies.

Kiran Mazumdar-Shaw, executive chairperson, Biocon and Biocon Biologics, said her company had been focused on non-communicable diseases, and with this alliance, they will foray into the infectious disease segment by leveraging SII’s expertise. These vaccines could be in the price range of $3-10 in the global market.

Mazumdar-Shaw and Poonawalla said at a media interaction on Friday that the 100 crore vaccine dose commitment was only the beginning and they would be working on larger opportunities that go beyond the Covid vaccines. “We are already exploring and the partnership will be sizeable,” Mazumdar-Shaw said.

Biocon Biologics will also be establishing at its cost a vaccine R&D division to develop vaccines and biologics for the alliance for the communicable disease segment. It could also make available its cell culture and sterile fill and finish capacities for vaccine production under the alliance.

Both entities will together work on mRNA vaccines, with Biocon Biologics focusing on research and clinics and Serum manufacturing those vacccines, Poonawalla said. SII could also license monoclonal antibodies to Biocon with a profit-sharing agreement, he said. Both Biocon Biologics and SII are continuously investing in expanding facilities to ramp up production facilities, Poonawalla said. SILS is setting up a new vaccine facility for mRNA in Pune, which would be available to the alliance. Construction work on this facility has commenced.

Both partners will also work together to face challenges of raw material availability as their vendors were finding it hard to scale up to meet their demands. Mazumdar-Shaw said they do not want to see the supply chain constraints the country has seen and don’t want to rely only on external vendors, so they were looking at being a vertically integrated player. Teams of both companies will be working on common raw material items of interest and 4-5 items have already been identified.

For this strategic alliance, Biocon Biologics will issue shares and receive contemplated rights through a merger with Covishield Technologies, a wholly-owned subsidiary of SILS.