Venus Remedies Receives Approval For ‘Vencoplus’ Patent In Australia

Pharmaceutical company Venus Remedies has announced that it has received patent approval for its product ‘Vencoplus’ from the Australian Patent Office (APO). This patent is valid till February 2026. The company has already received patent approval for this product in other markets like Japan, USA, South Africa, New Zealand, Ukraine, etc.

Vencoplus is a formulation against infection from Methicillin Resistant Staphylococcus Aureas (MSRA). The company believes that it is cost-effective and the only known product to control multi-drug-resistant bacteria.

According to the BSE filing of the company, about 7,000 Australians die each year due to multi-drug-resistant bacteria. The total market for MSRA is about USD 9 billion in the world and is growing at the rate of 4.8 per cent each year. This is expected to grow to USD 12.4 billion by 2017. Venus Remedies expects to gain good market share within three years from the launch.

The company has, however, not indicated when this formulation will be launched in Australia. In one of the earlier filings it had stated that it would be launching the same formulation in Japan by 2015. We believe that it will be a post-2015 launch in Australia. It also expects to out-license this product in many countries along with a plan to introduce it in other markets such as Canada, Europe, Russia, Mexico and Brazil.

The company is expecting to out-license three more drugs in the US market (Sulbactomax, Potentox, Achnil) in the next 2-3 years which will generate good royalty. Venus Remedies also has a breast cancer detection drug called Emiticin which will be launched in a few of the Asian countries. Meanwhile, our inquiries about the impact of all these products on its revenues were not addressed by the company.

On the financial front the company has reported 12 per cent rise in its topline for the period of first nine months of this fiscal. The operating margins have remained over 20 per cent. However, due to a surge in its interest cost its bottomline has remained silent at a profit of Rs 35 crore. As per its FY11 results, the company had a total debt of Rs 186 crore with a debt to equity ratio of 0.8x.

With the slow but steady launches over the next few years there would be growth in revenues. As for the bottomline, we are a little skeptical as in the last four years its profits have remained muted. We would not advise investors to buy this counter at this point of time. The shares of Venus Remedies were up 3.4 per cent to Rs 168.85 by the closing yesterday.