Poly Medicure - at an inflection point!

[spartan]

@Donald

When I first visited them, around 2012, the assembly line had 50 people. After a couple of years, again when we visited and enquired, no of folks had shrunk to 15. And by 2016 when we last visited and enquired it was down to 3 folks!! And all this automation was homegrown (not bought outs), designed and executed by them incrementally, over the years. (remember to check they export limited numbers of some of this machinery via subsidiary?)

when I tried to know about current operational status of company, the feedback I got was, company is functioning as usual as they have automated lines with minimum manpower requirement. I didn’t believe it completely but your explanation clears my doubt.
Even tough they are functioning current business scenario doesn’t look good. They are facing problem with logistics,exports haven’t picked up(?some govt restrictions),domestically Govt have cancelled many existing and expected tenders as they placed tenders for PPE and sanitizers which are needed.
I have gone through their product portfolio sometime back and impressed. They seem to cover most of the medical equipment which are part of day to day operations of hospitals and used repeatedly. It may not be easy for Polymed to gain domestic market share from brands like Dispovan, B BRAUN,RAMSONS which are known for good quality and product recall among health care providers. As per interaction there are many local companies which import devices from China and offers at competitive price to hospitals.

I have visited a local company involved in manufacturing and trading of dialysis equipment. Below is the summary based on inputs and my understanding. (This may not be very precise information though)
Dialysis can be done through two routes one is through HD catheter and other route through AV fistula. HD catheter is usually temporary route used in acute setting. Most of the end stage renal disease will have an AV fistula established for dialysis.

1. HD CATHETERS:
   There are around 45K dialysis machines in India. Each dialysis session is around 3-4 hrs. Possible dialysis session per machine is around 3- 4 per day. If we calculate conservatively :
   45k325 day: 33 lac treatments per month
   10% of them will be HD catheter based that is 3 lac HD catheters. Consider each catheter as around Rs.1500.00.
   45 Cr per month=500 cr per year (as many patients will be on same catheter for dew dialysis session we can consider 1/4 th of 500 cr as market size (125 cr)
   Mahurkar ( Medtronics ) is the leader in HD catheters with maximum(35%) market share and price is higher than other companies.
2. Dialyzers:
   Around 5 lac dialyzers are sold in India per month=60 lac dialyzers/year. Each dialyzer is around Rs.400 which gives market opportunity of around 240 cr per year.
3. Blood tubings and IV needles for AV fistula: based on approximate calculation it translates into market size of 300 cr and 75 cr respectively .
   (these are all approximate nos. I am happy to discuss through pvt message in case required)

Fresinus, Nephro,Baxter,Nikkiso are the market leaders. They are the leading dialysis machine manufacturer and their dialyzers with other consumables are preferred. Fresinus has around 80% market share. Recently state Govts of KA/TN/AP and kerala has given contracts to Nikkiso and Nephro.

4. Polymed has central venous catheters also. Roughly the market size for the same will be around 3 times of HD catheter.

Discl: Holding 4% of current portfolio. I have done transactions recently.