Fitch Ratings has revised the Outlook on India’s Biocon Biologics Limited (BBL) to Positive from Stable, while affirming its Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB-’.
The rating agency also confirmed the ‘BB’ rating on BBL’s USD 800 million secured notes, issued through its subsidiary, Biocon Biologics Global Plc.
BBL’s rating “is based on the credit profile of its stronger parent, Biocon Limited (BL), under our Parent and Subsidiary Linkage Rating Criteria. We think BL has high strategic and operational incentives to support its subsidiary,” Fitch said.
The Positive Outlook reflects expectations of a continued reduction in BL’s financial leverage after the company repaid liabilities using proceeds from a recent equity issuance.
Fitch noted that “our forecast does not incorporate further potential adverse developments related to US tariffs or drug pricing policy… but any such developments—if sustained over the medium term—could slow BL’s deleveraging and affect its credit profile.”
BBL’s global standing in biosimilars underpins the rating, despite its smaller size relative to major pharmaceutical peers. Fitch highlighted that “higher barriers to entry in the biosimilar industry from larger R&D needs and a more complex and longer approval cycle limit BBL's exposure to pricing pressure compared with companies focused on small molecule generics.”
The parent company’s 52.4% stake in Syngene International Limited further strengthens diversification, providing stable margins and steady client relationships.
Key Rating Drivers
Tariff Exposure: BBL earns roughly 40% of its sales from the US, primarily from production sites in India and Malaysia. Fitch said, “Escalating trade tensions or new tariffs in the US… could pose additional risks to BL, although the announced tariffs and policies do not have a significant impact.”
Equity Issuance Aids Deleveraging: BL’s January 2026 equity raise of USD 460 million helped reduce debt and structured instruments. Fitch projects EBITDA net leverage to drop below the positive rating threshold of 4.0x in FY26. “BL aims to return leverage to below 3.0x, after it rose from around 2.0x following its 2022 acquisition of Viatris Inc.'s biosimilar business,” Fitch said.
Leading Position in Biosimilars: BBL ranks third in trastuzumab and second in pegfilgrastim and insulin glargine volumes in the US, with rising shares. The company also ranks among the top-five sellers of multiple biosimilars in Europe and emerging markets.
Healthy Pipeline: BBL’s 20-asset biosimilar pipeline targets high-value opportunities. Fitch noted that “new launches and rising penetration, particularly in the US, should support healthy sales growth, despite some price erosion in existing products.”
Parent Support: BBL’s performance strengthens the parent’s incentive to provide support. Fitch stated, “We believe the common brand and synergies in R&D, compliance and manufacturing processes drive significant avoidance costs, resulting in a high operational incentive for BL to provide support.”
The secured notes are guaranteed by BBL and certain subsidiaries and are backed by equity pledges in subsidiaries holding key biosimilar IP.
Fitch said, “The collateral qualifies as a Category 2 first lien… supporting a one-notch uplift from the guarantor's rating: BBL's IDR.” Regulatory risk remains, as limited facility diversification exposes BBL to above-average risk from US FDA actions, and potential policy shifts could affect BL’s performance.
Fitch compared BL with larger pharmaceutical players: “BL has a smaller scale and narrower pipeline than larger peers with a focus on specialty and branded drugs, such as Teva Pharmaceutical Industries Limited (BB+/Stable) and Jazz Pharmaceuticals Public Limited Company (BB/Stable).”
While Teva benefits from wider diversification, it faces persistent pricing pressure, leading to BBL’s two-notch lower IDR. Jazz’s one-notch higher rating reflects its stronger competitive position, margins, and lower leverage, partly offset by narrower product and geographic reach.
