Shares of Biocon are trading lower by as much as 5 percent on Monday after the USFDA issued eight observations to the company's Malaysia plant. The regulator completed two Good Manufacturing Practice (GMP) inspections at the company's insulin facilities in Malaysia between July 10-20.

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The USFDA issued six observations to the drug substance, drug product and quality control labs, while two observations were issued to the delivery devices unit.

Biocon mentioned that the observations are not related to data integrity and not related to systemic non-compliance either. They are related to enhancing operational procedures and training programs.

The company will submit a Corrective and Preventive Action Plan (CAPA) to the regulator in order to address these observations.

As a result of this, the Insulin Asparte Biosimilar, which is used to treat diabetes is likely to be delayed. The Insulin Aspart, with a size of $1 billion, is likely to present an opportunity worth $100 million to $150 million for Biocon.

Biocon had responded to the Complete Response Letter on Insulin Aspart, which the USFDA had accepted during the March quarter.

Brokerage firm Bernstein said that Biocon will be unable to get approvals from the USFDA until these observations are addressed. It estimated Aspart sales of $8 million in the US in financial year 2024 and $36 million in 2025. The firm further said that Biocon remains the first and the only biosimilar with an $800 million target market, which remains intact.

In other news, the European Union regulator issued a positive opinion on Biocon's biosimilar Aflibercept or YESAFILI. The Afilibercept biosimilar is an ophthalmology biosimilar used for age related macular degeneration. The positive opinion will be considered by the European commission. The approval from the commission is expected by September 2023. The sales of this biosimilar is said to be $1.8 billon.

Shares of Biocon are trading 5 percent lower at Rs 250.85.