Biocon shares fall 3% as bribery allegations surfaced against subsidiary

Shares of Biocon slipped
nearly 4% on Wednesday after allegations of bribing a central government agency
that approves drugs in India emerged against a company subsidiary’s official.

The stock traded down 3.66% to
Rs 313.20 on the BSE. The shares had hit a 52-week low of Rs 313.35 earlier in
the week, and it has again dropped close to that level.

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The Central Bureau of
Investigation (CBI) alleged that senior officials of the Central Drugs
Standards Control Organisation (CDSCO) colluded with Bengaluru-based
pharmaceutical company Biocon Biologics to waive the phase-3 clinical trial of
the Insulin Aspart injection, and also manipulated the minutes of the subject
expert committee (SEC) meeting causing “substantial wrongful gain” to Biocon
Biologics.

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The CBI has arrested five
people, including S Eswara Reddy, joint drug controller at CDSCO, and L Praveen
Kumar, associate vice president and head of national regulatory affairs (NRA)
at Biocon Biologics.

The central agency is
investigating the role of a Delhi-based conduit that played a role in
facilitating bribes. It alleged that this conduit conspired with Kumar and
other executives of Biocon Biologics to pay a bribe of Rs 9 lakh to Reddy for
“favorably processing three files” related to the diabetes injection Insulin
Aspart.

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In a statement, Biocon
Biologics said, “We strongly deny the allegations of bribery against the
company and its officials associated with the approval process of one of our
products in India”.

“Biocon Biologics follows due
regulatory process for all our product approvals by the DCGI. The entire
application process in India is online and all meeting minutes can be found on
the website of the Central Drugs Standard Control Organization (CDSCO),” it
said.

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In the past two months, Biocon
has underperformed the market as it plunged 17% against a 9% fall in the
Sensex. The company reported a 4% year-on-year decline in consolidated net
profit to Rs 283.9 crore in the March quarter of fiscal 2022. It had reported a
consolidated net profit of Rs 296.4 crore in the same quarter of the previous
financial year.

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However, the consolidated
revenue from operations in the March quarter rose 31% year on year at Rs 2,409
crore as against Rs 1,842 crore in the year-ago period.

The stock closed 10.00 points
or 3.08% to close at Rs 315.00 per share.