The Economic Times reported today that Bayer's chairman Werner Wenning met with Biocon's officials last week in Bangalore, India to talk about opportunities for an agreement with the Indian firm.
"We are considering options to develop products together.
Biocon has world class R&D centres with excellent facilities," Wenning told the Economic Times.
However he stressed that the two companies had not yet signed any agreement.
Biocon's chairman and managing director Kiran Mazumdar-Shaw confirmed to Outsourcing-Pharma.com that the deal with Bayer may involve the co-development of biologic drugs as well as the supply of contract research services through its Syngene unit.
Biocon's contract research segment includes its R&D services business performed by its subsidiary Syngene and its clinical research unit, which is run by Clinigene.
M.B. Chinappa, Biocon's vice president of finance, told Outsourcing-Pharma.com in an earlier interview that the company will focus on increasing the share of its research services segment to a quarter of its total revenue in the next three years.
The Bangalore-based company's annual performance for the fiscal year 2007 was largely driven by its contract business as revenue in the firm's research services and licensing segment grew 63 per cent, to Rs 163 crore (€29m) contributing 17 per cent of its operating revenues for the year.
Chinappa said Biocon is planning to boost its contract research business as global pharma companies such as Bayer are increasingly looking to outsource R&D to India.
Separately, Biocon has completed the sale of its enzyme manufacturing business this week.
The firm signed a definitive agreement to divest the unit to Novozymes for $115m ($81m) in July in order to focus on its core biopharmaceuticals business, which includes active pharmaceutical ingredients (APIs), biological and proprietary molecules both commercialised and under development..
In the quarter ended June 30, 2007, Biocon's revenue from the enzymes business dropped by 3 per cent compared with that in the same quarter last year.
Meawhile, Biocon's subsidiary Syngene recently entered into a partnership with Bristol-Myers Squibb (BMS) to provide the drug giant with services for the development of drugs.
Syngene is currently building a new R&D facility in Bangalore, which will house up to 400 Biocon scientists who will provide medicinal chemistry, biology, drug metabolism, and pharmaceutical development services on behalf of BMS.