Biocon Biologics Earns 'BB+' Rating from S&P Global in 2026

S&P Upgrades Biocon Biologics to 'BB+' with Stable Outlook

Biocon Biologics Limited, a subsidiary of Biocon Ltd., announced on January 28, 2026, that S&P Global Ratings has upgraded its long-term issuer credit rating to 'BB+' from 'BB'. The ratings agency also revised the company's outlook to "Stable," signaling confidence in its financial health. This upgrade extends to the senior secured notes issued by Biocon Biologics Global PLC, which also now carry a 'BB+' rating. The positive revision comes after Biocon's strategic moves to simplify its capital structure, primarily through a recent equity issuance to settle obligations with Viatris Inc.

Rationale for the Credit Rating Upgrade

The core reason for the upgrade, as outlined by S&P Global, is Biocon's successful simplification of its capital structure. The company has significantly reduced its structured debt liabilities. A key component of this deleveraging was the settlement of US$1 billion in compulsorily convertible preference shares (CCPS) that were issued to Viatris. This was achieved through a combination of equity share swaps and a cash payment. To fund the cash portion of the settlement, Biocon raised approximately US$160 million in fresh equity earlier in January 2026. This proactive financial management has strengthened the company's balance sheet and reduced its financial risk profile.

The Journey from Acquisition to Deleveraging

This rating upgrade marks a significant milestone in Biocon's journey following its major acquisition in November 2022. The company acquired the global biosimilars business from Viatris for US$1.3 billion, a transformative deal aimed at creating a world-leading biosimilars player. However, the transaction substantially increased the company's leverage. The group's debt-to-EBITDA ratio surged from approximately 2x in fiscal 2022 to around 7x in fiscal 2024. The recent financial restructuring and subsequent rating upgrade demonstrate management's commitment to restoring the balance sheet to pre-acquisition strength, a key factor underpinning its improved credit strength.

Key Financial Metrics and Changes

The recent actions have fundamentally altered Biocon Biologics' financial standing. The upgrade reflects a tangible improvement in its creditworthiness and a clearer path to sustainable financial health.

S&P's Projections and Market Outlook

S&P Global's stable outlook is based on the expectation of steady earnings growth for Biocon over the next 12 to 24 months. This growth is anticipated to be driven by rising demand for generics and biosimilars in key international markets, coupled with the launch of new products. The ratings agency projects that the broader pharmaceutical sector will maintain healthy growth through 2027, with strong demand for treatments in areas like GLP-1s, oncology, and rare diseases, all of which align with Biocon's focus areas.

S&P forecasts Biocon's EBITDA will grow to approximately INR 45 billion by fiscal 2027, up from an estimated INR 34 billion in fiscal 2025. This growth is expected to be supported by a revenue base expansion and stable EBITDA margins of 22%-23%. Consequently, the company's Funds From Operations (FFO)-to-debt ratio is projected to improve to around 30% by fiscal 2027 from about 22% in fiscal 2026.

Management's Financial Policy

The rating action validates the financial policy adopted by Biocon's management. The leadership team has remained vocal about its commitment to deleveraging and strengthening the company's financial foundation following the Viatris acquisition. The company's strategy involves maintaining annual capital expenditures between INR 15 billion and INR 20 billion, which should allow for positive discretionary cash flow through fiscal 2027. This disciplined approach is expected to support continued investment in its robust pipeline of over 20 biosimilar assets while systematically reducing debt.

Conclusion: A Strengthened Position for Future Growth

The upgrade of Biocon Biologics' credit rating to 'BB+' by S&P Global is a clear endorsement of its strategic financial management. By successfully settling its obligations to Viatris and simplifying its capital structure, the company has significantly de-risked its balance sheet. With a stable outlook, strong earnings growth projections, and favorable industry trends, Biocon Biologics is now in a much stronger position to capitalize on its integrated 'lab to market' capabilities and continue its mission of providing affordable access to high-quality biosimilars to patients worldwide.