Cash injection for bio insulin busines
Bioton has carved a name for itself as one of the country's leading recombinant or so-called 'human' insulin producers in Poland. Last year the synthetic hormone, sold under the brand name Gensulin, reached 7 percent of the insulin market, accounting for 40 percent of the company's annual zł.107 million turnover.
The move into biotechnology follows the Polish Prokom Investments' purchase of 49.9 percent of Bioton's shares when the firm was searching for a strategic investor eight years ago. Since then roughly zł.80 million has been ploughed into Gensulin's development and production.
Now the firm is looking to capitalize on its success and generate more funds with an IPO scheduled before the end of the year. The issue prospectus is expected to be published next month.
Bioton, which still specializes mainly in antibiotics production, is looking forward to expand and differentiate its biopharmaceutical offer. Of course, developing new medications is always costly and laborious.
"Inventing a new product and putting it into production takes 5 to 6 years," says Bioton's vice president and financial director Piotr Wielesik.
Gensulin, meanwhile, is being lined up to conquer foreign markets next. In fact, it is already on sale in Egypt, where the necessary pharmaceutical permissions are issued faster, and the EU registration process is already in motion. In Poland they hope Gensulin will grab 20-30 percent of the market in 2 to 3 years' time.
Yet despite the positive outlook, there are a number of factors casting a shadow over the company's IPO.
Its current owners are not listed and are therefore off the radar of brokerage houses, and potential large investors are likely to be disappointed that no more than 10 percent of the total stocks will be on offer. Larger stock packets were sold earlier this year in closed transactions (for instance 12.36 percent for Bank of Austria Creditanstalt) while the vast majority (49.99 percent) is still owned by Prokom Investments.
"No existing investors have any intention to sell their shares during the first few months after the IPO," said deputy director at CA IB Financial Advisers Piotr Rusiecki, whose firm is organizing Bioton's IPO. This means that the stocks worth zł.16 million are all investors will get.
Financial indicators might cause discouragement as well. Bioton has reported net losses two years in a row, although that was in 2000 and 2001.
"Our huge investments in biotechnology had to affect our annual financial balance," Wielesik says, explaining the weak performance. He adds: "In 2003, when insulin sale boosted, our net gain reached zł.8 million in Bioton, and some more in the whole group."
A report from the IMS Health consulting group states: "Since the first biopharmaceutical product registered in 1982 the biopharma market has come a long way." And it is hard to disagree. The total market of bio-engineered drugs exceeded $32 billion worldwide in 2003. The dynamic of the segment is equally impressive, estimated at 28 percent of compound annual growth over the last five years. The traditional drug market reported just 14 percent growth in the parallel period.
Bioton board member Henryk Dąbrowski and managers quote those figures with satisfaction and underline that recombinant human insulin sales would alone reach $5.8 billion by 2006. However, until the prospectus is released financial analysts are declining to comment on this optimistic picture.
The move into biotechnology follows the Polish Prokom Investments' purchase of 49.9 percent of Bioton's shares when the firm was searching for a strategic investor eight years ago. Since then roughly zł.80 million has been ploughed into Gensulin's development and production.
Now the firm is looking to capitalize on its success and generate more funds with an IPO scheduled before the end of the year. The issue prospectus is expected to be published next month.
Bioton, which still specializes mainly in antibiotics production, is looking forward to expand and differentiate its biopharmaceutical offer. Of course, developing new medications is always costly and laborious.
"Inventing a new product and putting it into production takes 5 to 6 years," says Bioton's vice president and financial director Piotr Wielesik.
Gensulin, meanwhile, is being lined up to conquer foreign markets next. In fact, it is already on sale in Egypt, where the necessary pharmaceutical permissions are issued faster, and the EU registration process is already in motion. In Poland they hope Gensulin will grab 20-30 percent of the market in 2 to 3 years' time.
Yet despite the positive outlook, there are a number of factors casting a shadow over the company's IPO.
Its current owners are not listed and are therefore off the radar of brokerage houses, and potential large investors are likely to be disappointed that no more than 10 percent of the total stocks will be on offer. Larger stock packets were sold earlier this year in closed transactions (for instance 12.36 percent for Bank of Austria Creditanstalt) while the vast majority (49.99 percent) is still owned by Prokom Investments.
"No existing investors have any intention to sell their shares during the first few months after the IPO," said deputy director at CA IB Financial Advisers Piotr Rusiecki, whose firm is organizing Bioton's IPO. This means that the stocks worth zł.16 million are all investors will get.
Financial indicators might cause discouragement as well. Bioton has reported net losses two years in a row, although that was in 2000 and 2001.
"Our huge investments in biotechnology had to affect our annual financial balance," Wielesik says, explaining the weak performance. He adds: "In 2003, when insulin sale boosted, our net gain reached zł.8 million in Bioton, and some more in the whole group."
A report from the IMS Health consulting group states: "Since the first biopharmaceutical product registered in 1982 the biopharma market has come a long way." And it is hard to disagree. The total market of bio-engineered drugs exceeded $32 billion worldwide in 2003. The dynamic of the segment is equally impressive, estimated at 28 percent of compound annual growth over the last five years. The traditional drug market reported just 14 percent growth in the parallel period.
Bioton board member Henryk Dąbrowski and managers quote those figures with satisfaction and underline that recombinant human insulin sales would alone reach $5.8 billion by 2006. However, until the prospectus is released financial analysts are declining to comment on this optimistic picture.
