Biocon Biologics Limited, a subsidiary of Biocon Limited, officially announced that S&P Global Ratings has upgraded the company's long-term issuer credit rating to 'BB+' from 'BB' and revised the outlook to stable. As per the company's announcement, the rating on senior secured notes issued by Biocon Biologics Global PLC has also been upgraded to 'BB+' and removed from CreditWatch, where they were placed with positive implications earlier. The upgrade primarily stems from the company's successful capital structure simplification through recent equity transactions that enabled settlement of structured debt obligations.
According to S&P Global Ratings, Biocon's adjusted debt declined significantly to approximately ₹115 billion at the end of fiscal 2026, down from ₹248 billion in fiscal 2025. The company utilized fresh equity proceeds of US$460 million from recent issuance in January 2026 and US$520 million raised in June 2025 to settle a US$1 billion compulsorily convertible preference shares (CCPS) arrangement with Viatris Inc. through a combination of equity share swaps and cash consideration. This substantial reduction reflects the removal of structured debt liabilities and CCPS obligations that were previously considered debt-like instruments in financial ratio calculations. The debt reduction represents a significant improvement from the debt-to-EBITDA ratio of approximately 7x in fiscal 2024 following the US$3.3 billion acquisition of Viatris' biosimilars portfolio in November 2022.
S&P Global Ratings projects substantial improvements in Biocon's key financial ratios following the capital restructuring. The funds from operations (FFO) to debt ratio is expected to improve dramatically to about 22% at the end of fiscal 2026 from less than 10% in the previous year, with further improvement to approximately 30% by fiscal 2027. The rating agency forecasts debt-to-EBITDA ratios of 3.0x in fiscal 2026 and 2.4x in fiscal 2027, alongside revenue growth of 13-15% annually in fiscal 2026 and 2027 with EBITDA margins projected at 22-23% over the next three years. S&P anticipates Biocon's EBITDA to grow to roughly ₹3,780 crore by fiscal 2027 from ₹2,856 crore in fiscal 2025, supported by revenue base expansion and stable margins.
According to S&P Global Ratings, Biocon's revenue growth will be led by its biosimilars business, which is estimated to grow by approximately 15% in fiscal 2027. The scale-up and market share gains of new products bStelara and Aflibercept are expected to offset price erosion effects inherent to the generics industry. The company maintains 10 commercialized biosimilars currently in its portfolio with a pipeline of 20+ biosimilar assets across multiple therapeutic areas, serving over 6.3 million patients across 120+ countries. The generics business is expected to grow by about 10% led by new product launches such as Liraglutide in the U.K. and EU markets. S&P expects the pharmaceutical sector to experience healthy growth through 2027, particularly in GLP-1s and treatments for oncology and rare diseases.
As reported by S&P Global Ratings, Biocon's management is committed to returning the balance sheet to pre-acquisition levels following the Viatris biosimilars portfolio acquisition. The company's annual capital expenditure is anticipated to remain consistent at ₹1,260-1,680 crore, leading to positive discretionary cash flow through fiscal 2027. S&P also expects annual dividends of ₹67-101 crore. The stable outlook reflects S&P's view that the company's earnings will grow steadily over the next 12-24 months, supported by growing demand for generics and biosimilars in key international markets and successful new product launches. Biocon Biologics operates as a fully integrated global biosimilars company with eight manufacturing sites globally - six in India, one in Malaysia, and one in the United States.
