Poly Medicure - at an inflection point!

(Piyush) #181

Poly Medicure plans to reach out to all corporate hospitals in Gujarat and increase its presence in rural areas of the state.The company also announced its plans to start new verticals like blood management, infusion device division, surgery, wound care division and critical care division. The company will launch 30 new products in the current financial year mainly in the field of anaesthesia and haemodialysis.

Hemant Bhalla, AVP, Poly Medicure, said, "Polymed attributes its performance to healthy order book position and higher productivity, increased sales realization and improved working capital management. Part of the expanded capacity has also been utilized, resulting in this achievement. We also have a budget of Rs 75 crore in expansion plans on new product development and capacity expansion for 2014-2015 and 2015-2016."
Polymed aims to grow by 25% per annum in the next three to five years.

Source: ET New

Disc: Invested.

(JatinK) #182

Results out.

Sales up 17% at 82.8 crs.

Pat up 2% at 9.7 crs.


There has been some margin pressure over the last few quarters. Any idea why?

Even sales growth isn’t great. Were they having capacity constraints in the quarter?

(Rudra Chowdhury) #183

Poly Medicure wins long patent battle against German pharma giant B Braun

Confirming the development, Rishi Baid, director, Poly MedicureBSE 18.09 % Ltd, told ET, “The concerned two patents have been revoked by the European Patent Office, as per our information and it is likely to have a huge positive impact on our business in Europe.”



(Venkatesh) #184

Poly Medicure wins long patent battle against German pharma giant B Braun (Economic Times)

Poly Medicure, an Indian medical devices firm with annual sales of just over Rs 320 crore, has won a five-year long patent battle with Rs 40,000 crore German medical devices and pharma giant B Braun as the European Patent Office (EPO) revoked two of the latter’s patents covering features of intravenous (IV) safety catheters.

B Braun appealed against these decisions at the boards of appeals, a redressal forum within the EPO structure, but the appeals have been turned down by the boards and the patents of B Braun revoked, according to orders passed last month and earlier in June, reviewed by ET.

Confirming the development, Rishi Baid, director, Poly Medicure Ltd, told ET, “The concerned two patents have been revoked by the European Patent Office, as per our information and it is likely to have a hugepositive impact on our business in Europe.”

This could help Poly Medicure gain a firmer foothold in the $250-million European safety catheter market which uses up to over 300 million IV catheters yearly, according to industry estimates.

This could also bolster its case in some of the other European jurisdictions where it is defending patent infringement suits from the German giant.

The Indian company, or its distributors, have been sued by B Braun in many countries such as Germany, Italy, Spain, Malaysia the Netherlands, Australia and even India for alleged patent violations.

While global patent battles between Indian players and large multinationals are fairly common in the pharmaceutical sector, such cases have been rare in the medical devices space.

But B Braun hasn’t given up on the patent battle. Admitting that a couple of its patents have been recently revoked by the EPO after years of opposition and appeal, a company spokesperson told ET that they are still confident of emerging victorious in the pending patent suit case in a regional court of Germany and some of the other countries.

“Polymed’s Australian distributor has had the same experience as their European distributors, to our knowledge, finding no repeat customers for their product,” said the B Braun spokesperson, adding that he doesn’t believe that Poly Medicure will gain a lot of business in Europe. He added that another patent dispute related to this product is yet to be decided in Europe and B Braun is already pursuing another legal recourse in Europe and Australia.

Hailing Poly Medicure’s victory as ‘significant’ and ‘encouraging’, its Indian peers say this may prompt few other players to consider taking on global giants in their home turfs, but most Indian medical device makers will still not be able to afford such patent wrangles in regulated markets.

“Unlike pharma players, medical device makers in India are still small and the prohibitive costs involved in fighting such patent battles in developed markets will deter them from taking this route, particularly when they are aware of the muscle and deep pockets of the rival global giants,” said promoter of a competitor Indian medical device firm.

Disclosure: I am a shareholder

(HG) #185

Awesome. Looks like somebody saw it coming - it really took off last week.

disc: invested.


Thank you Venkatesh for the news item. Now I understand why the stock went up around 190 points in two days.

(Donald Francis) #187

Just to put things in proper perspective:

1). This patent win is country specific to Germany. It is a significant development as it is in the home base of B Braun.

2). Does not mean anything for other countries in the region each country applies its own laws and wisdom. Poly Med has lost its case if I remember correctly in Spain earlier (Pls check Management Q&A. Pitched battles on the patent infringement front will continue to be fought country by country - wins and losses both are possible

3). PolyMed has been selling in Germany earlier also (despite the case) but on low volumes. Distributors were naturally reluctant to engage in more than token volumes - not to antagonise big daddy. The win ensures that reluctance may now be over

4). However that does not guarantee big Sales in any way. Big investments in Sales & Marketing Push will still need to be made (absent till now in Germany). Sales in developed markets in Medical Devices are completely dependent on getting the right Distributors on board - which usually means on their Terms, especially when challenger market share is negligible to Nil (refer Opto Circuits research)

5). The bigger constraint on Sales in near future Fy15 is lack of big incremental capacities. Faridabad facility is operating at 90% utilisation with no scope for expansion. Haridwar capacity has doubled but that’s small in comparison. Jaipur facility has started but very small. Overall Sales expectations cannot be more than 25% or say 370-380 Cr for the year.

Faridabad & Haridwar no further expansion possible on existing Land. Expansion possible in Jaipur where they have utilised only 1 Acre out of 4 Acres, but obviously big incremental capacity will take time to build.

6). Margin expansions are possible only when Safety Device contribution goes up significantly in product Mix - which is still quite a distance away - and in our opinion - heavily dependent on contracts cracking the US market. Germany/EU additional Sales unlikely to be more than 10 Cr or so at the moment.

7). Overall this is a positive development and augurs well for the longer term - also a great confidence builder for Team PolyMed.

8). In our opinion, impact of the win currently is more in the Intangibles. Nothing materially has changed in near-term to medium term business growth prospects. For that the real execution drivers on-ground need to be in place which will take time.

9). Our expectations of the business remain 20-25% growth for next 2-3 years as on current facts/information. Existing Investors should stay put.

10). Market reaction is hugely exaggerated in our opinion - this is typical bull market froth which feeds on news play and build-up.

Disc: Holdings >5% of Portfolio; Remain invested for over 2+ years

New users should do a complete diligence on the business, opportunities & challenges. Read Stock Story and multiple Management Q&As for proper understanding of above issues.

Do not get swayed by Mr Markets reaction. Helps to remember & re-iterate for ourselves Guru Lynch’s warning - "Current Price of the Stock has no bearing on the Future Prospects of the Business"

(Aksh) #188

Thanks Donald for taking time off to so lucidly explaining new developments and showing how much you care.

(HG) #189

Thanks for the update, Donald.

Came across the below article ascribes another reason for the jump - 100% FDI in medical devices -

(Donald Francis) #190

Thanks HG.

100% FDI for brownfield Medical Devices projects would be very welcome.

In our understanding the next level for Poly Medicure has to come through some manufacturing JV and/or big US Market guaranteed off-take Contracts, or any such mechanism that enables PolyMed to leverage its low-cost manufacturing with the marketing/distribution strengths of a strategic partner for Developed Markets, specifically USA. Management too has re-iterated that in our last Q&A.

But that is something that cannot/should not be factored into current Entry/Valuation estimates. As & when something like that comes (which it has to one-day, ART of Valuation:))) it should be treated as a BONUS. So the caution-note above stands, not-withstanding this reported development.

Will check with Management if they have any reactions to offer on the reported 100% automatic FDI route for Medical Devices, or any developments/progress on that front.

(ashaggarwal) #191


am just not able to understand one thing - for 20-25% growth, why not hdfc bank types?

Polymedicure is trading at 30 PE FY 2015 and maybe 24 PE FY 2016. when compared to proven quality, either growth should be much higher or valuation should be much lower.

just curious.

(Donald Francis) #192

Obviously there will be a difference of approach between making fresh allocations decisions and the decision to stay put in the business.

You are right about HDFC Bank being a better investment for fresh allocations at the moment.

All our proven quality small caps have run up a lot, but it makes sense to Hold on to Poly Medicure - based on a) You have a very high margin of Safety so you can safely enjoy the bull ride (PolyMed Recco made at 12x forward) b) the Business Category we slot the business in is A+ (Intellectual Property; disproportionate future gain building blocks have been laid - low-cost quality manufacturer leverage for JV with strategic Marketing partner/FDI etc) so Valuation re-rating may/should happen in time

Everyone should follow the Assessing Value to a 100% Acquirer of the Business thread - where we are trying to illustrate how to Value the Intangibles in a Business to be able to correctly slot a Business in A, A+ or A++ category.

Simple framework posted recently (to be refined). Also see and participate in Kitex thread for discussion on how to slot Kitex Garments and the Valuation exercise.

(Aveek Mitra) #193

Donald has very nicely put things in perspective. Excellent Donald!

Poly’s legal win is a very big booster for long term. It is something akin to taming the lion in his den!

IV catheter market is US$ 250 Mn and according to interview by management in Moneycontrol, they expect to get 7% to 10% market share in 2 - 3 years time. So, they were very cautious in not overplaying the win. I liked it.

Disc. : I got the investment idea into Poly Medi after starting to visit this site couple of months back. Immediately pounced on it :slight_smile: :slight_smile: … Thanks Donald and everyone in this wonderful community!

(Atul Garg) #194

Fy14 AGM update:

-To introduce 20 new products in the domestic market in next year. Most of these will be import substitutes.

)- Domestic marketing team has been increased from 60 to 125 over last couple of years. And plan to add 100 more in next two years.

)- Covering around 3000 domestic hospitals (talking to them) and it takes approx a year to engage a meaningful relationship with an institute.

)- company is targeting 30-35% growth in domestic (overall???)

)- Not yet able to provide the complete basket of products for an area, but working on it.

)- Patent win should help bring in revenues ( how much…???) in two years time frame.

This was a pretty quick AGM, Management seemed to be in hurry, every thing was over in less than an hour and 15 minutes.

(Neerav Paliwal) #195

Its Australian distributor loses patent disputes against B. Braun.

From the below news article -

In view of the two above-mentioned successful litigations inAustraliaandSpain, B. Braun is confident it will also ultimately prevail in its German litigation before the Regional Court of D¼sseldorf against Polymed and their German distributors (case no. 4b O 115_13) which is stayed upon the parties’ request until the European Patent Office has rendered a first instance decision in the opposition against B. Braun’s patent in suit EP 1 911 487.

(Venkatesh) #196

Is this is something really big to worry about. The stock hit upper circuit when they won the patent battle in Europe against B Braun. What about this patent loss?

Can some of the seniors please give their views.

(Amitayu) #197

First of all I am not a senior member.

Managementmade clear Poly Medicure does not expect that their products will be accepted in all the nations and hence they decided to challenge the earlier injunction in those nations whereopportunitysize is bigger and they got back the legal investment (likeGermany)

(HG) #198

Results are out -


One time settlement has really boosted numbers. Stock to be split from FV 10 to FV 5.

(Abhishek) #199

There are 4 companies that I really like and want to get in but I don’t know how to justify paying these kind of prices? Can anyone explain which kind of DCF justifies a price of 850 for Poly Medicure? I am missing something?

1). Page

2). La Opala

3). Poly Medicure

4). Symphony

How do you justify paying 50+ times PE (discounting earnings 2 years away) however good the quality of earnings may be? I have been disciplined enough (obviously missing out on enormous gains) for the last few months but its baffling to me that whenever I feel that the valuation is crazy, these stocks just continue to run even higher. I don’t have an iota of doubt about the quality of each of these businesses but isn’t a part of value investing also not just about buying the right company but also buying at the right price?

I am a part time investor but spend a huge part of my free time reading about stocks and value investing and have been investing for 3 years now. But whenever I look at either one of these 4 running away to perpetuity, I feel despite all this reading, I am really missing something big.

Seniors, really looking for some help here. How far do you think these companies are from their fair valuations or am I the only one who feels that these companies are nowhere close to a bargain?


Abhishek -

I’m also in the same boat as you are in. On hindsight, I’ve “missed” buying Kitex, Sundaram Finance, CRISIL and MPS when I should’ve clearly bought them. To think of it, I’d done my research with Kitex way before even VP gave their buy reco and today the stock is up over 200%, PE expanded from 14 times to 40 times.

I’ve some spare cash now which I’m going to use to rejig my portfolio not think of dumb anchors like PE multiples. From my very limited experience two strategy have helped:

1). It is good to buy when you think the price is a no brainer. Lke Ajanta Pharma traded for around Rs 900 for a very long time, Kaveri seeds even very recently was available for 18-19 times earnings, etc. I feel really good investments are so rare that we might not have the temperament to invest for just 20 times in our investing lifetime. Going for no brainer buy is the next best alternative.

2). I feel what we read might not hold true in emerging markets like India. It is better to buy not thinking about how much the stock has run up or quoting at 50 times earnings etc. It is good if we think about the size of market and go for the stock keeping the future potential at mind. Ashiana housing is quoting at 140 times (!) earnings but thinking that they’ve just delivered 9000 odd houses coupled with a super huge market size & Indian RE biased mentality, it might still be a good buy at 140 times earnings?

P.S: I’m neither a senior nor as smart as I would like myself to be.