Biocon raises $1.2 billion green loan to fund purchase of Viatris unit

Biocon has raised a $1.2 billion green loan to fund its purchase of Viatris’s biosimilar business. The loan could be the largest green loan raised by a pharmaceutical company in the Asia pacific region, the company noted in a press release.

Biocon agreed to meet certain sustainability targets that helped reduce the cost of the loan.

According to sources, the loan came at a cost of 175 basis points above the secured overnight financing rate or SOFR. The loan has a tenure of five years.

Biocon has agreed to meet certain targets such as increasing biosimilars access to patients, increasing its workforce diversity, increasing use of green energy and reducing water usage.
The loan has been arranged by a consortium of banks led by HSBC and Standard Chartered.

By agreeing to the terms of a green loan, Biocon may end up saving atleast 50 basis points in loan costs. This would mean its interest outgo could reduce by a few million dollars every year.

Such loan arrangements could become popular templates for pharma companies to follow, according to banking experts.

Biocon announced that it would be acquiring Viatris’ biosimilars business in a $3.335 billion deal on 28 February. The business has revenues of around $1 billion. Viatris will receive the consideration in a combination of cash and stock.

As part of the transaction, Biocon will pay Viatris $2 billion in cash and issue equity worth $1 billion to Viatris in Biocon Biologics. This will give Viatris a 12.9% stake in Biocon Biologics. By 2025, Biocon will pay an additional $335 million to Viatris.

(With inputs from health)