Monday, July 14, 2014

Themis Medicare - On The Comeback Trial ?

Themis Medicare Limited (Themis) was incorporated in 1969; it is a joint venture pharmaceutical company with Gedeon Richter Ltd., Hungary ( . The company was originally known as Themis Chemicals Ltd, before changing its name to Themis Medicare in 2001.

Themis operates mainly in two segments – Bulk Drugs / Active Pharmaceutical Ingredients (APIs) and Formulations. With its manufacturing plants in Vapi, Hyderabad and Haridwar the company produces a wide range of bulk drugs, formulations and biotech products.
The company has products across different therapeutic areas : Anti-tuberculosis, Anti-malarials, Anaesthetics, Anti-Haemorrhoidal, Cardiology, Pain Management, Anti-infectives, Haematinics and Health & Nutrition etc.

Some of the companies key brands include E Mal (Malaria), Sepgard (Wounds / Bleeding), Instanac (Pain Relief), Acejet, Etojet, Dexem, Palonosetron, Themiset, Ketmin, Medzol, Bupicain, Neotagmin, Atacurium, Malither, Tiostat, Ezee etc.

In the API segment, the company manufactures Simvastatin, Ethambutol, Artemether, Artesunate, Lumefantrine, Methyl Cobalamine, Di Methyl Isosorbide, etc

Performance - Last 5 years :
Sales (Rs Cr)
PAT (Rs Cr)
Diluted EPS (Rs)

Themis suffered a major set-back in 2011-12 wherein they had to stop supplies to one of their major export customers due to certain problems. At the same time stiff competition in the bulk drug (APIs) market from local & Chinese firms also hit the company hard.
Management identified the reasons for the set-back & decided to implement various steps to resolve the situation, such as :
·         Too change the Bulk drugs (APIs) – Formulations mix in favour of Formulations & finished dozes gradually, where profit margins are better and competition is less fierce, by introducing new formulations.
·         Upgrade the API plants
·         Implement cost-cutting strategies
·         Better inventory control & credit control
·         Develop Institutional business
·         Export to new geographies
·         Revive & re-establish their brands in the market

Looking at the improvement in the financials over the last couple of years, it appears that the medicine has started to work, and the patient is on the way to a full recovery.

Positive Developments over the last 2 years :
·         2013 : Themis tied up with Beta Healthcare International Limited (an Aspen Group Company) for marketing of Research based Pharmaceutical Formulations manufactured by the company in Sub-Saharan Africa Region. The products to be marketed encompass Therapeutic Groups like Anti-Malarial, Pain Management etc

·         2013 : License and Supply Agreement entered between Themis and Novartis India Limited (“Novartis”) in March, 2013 whereby Themis agreed to supply Diclofenac topical gel formulated using a unique TPM™ Transdermal Drug Delivery . TPM™ (Targeted Penetration Matrix) Transdermal Drug Delivery has been licenced from Phospagenics Ltd (“Phosphagenics”) , Australia (website : Read the Phosphagenics announcement here :

·         2013 : Break through development of Diclofenac 75 mg / ml injection using patented technology and signing of a Supply & Distribution Agreement between Themis and Novartis in Aug 2013 for  manufacture and supply of Diclofenac Sodium 75 mg / ml Injection as a finished dosage product for the Indian market, wherein Novartis has agreed long term exclusive purchase of this product from Themis

·         2014 : Commencement of supply to Novartis of Diclofenac Topical Gel using TPM™ Transdermal Drug Delivery System in finished dosage pharmaceutical form under the brand name “VOVERAN TPM gel”. Launch of Themis’ own Diclofenac product “Instanac TPM gel” using the TPM™ technology. Read the Phosphagenics announcement here :

·         2014 (14th July) : Themis announces the commencement of production, marketing and sales of Aquadol Spass 1 ml Injection, developed by the company. Aquadol Injection is used by Urologists, Gastroenterologists, General Surgeons, General Practitioners etc and is used mainly for treating patients suffering from colic pain and spasm. Company says the product has export potential & presents a licensing opportunity. Company also announces plans to come up with an oral tablet formulation under the name of Aquadol tablet .

In Brief :

Themis Medicare Ltd

BSE Code : 530199, NSE Code : THEMISMED

Equity : 8.45 Cr

CMP :Rs 97.50 (closing, BSE, 30th June, 2014)

MCap : 82.39 Cr

Conclusion & Recommendation :
Every company goes through difficult periods, how they deal with it is what differentiates good companies from the average ones.

After suffering a major setback in 2011-12, Themis management correctly diagnosed the ailment & set about healing itself with the right prescription. The results have started to trickle through.

Moreover, the tie-ups entered into  over the last 2 years have also started to be commercialized & this should add impetus to the improving trend.

Promoters have also increased their stake over the last couple of years through a preferential issue as well as through market purchases, which gives additional comfort.

This author reckons  that the worst is over for the company & the company is now on the right track. He therefore recommends readers of this blog to study & track the company going forward.  Readers may take an appropriate call based on their own conviction in this idea, after proper research.

Author : Bosco Menezes

Recommendation Date : 30.06.2014

Disclaimer/Disclosure :

At the time of writing this article the author has a position in the stock covered by this report. The author or any of his dependent family members may make purchases or sales of the securities mentioned in the report while the report is in circulation. Readers/recipients of this report are strongly advised to do their strict due diligence, and should be aware that the value of investments can go down as well as up. The author shall not be liable for any direct or indirect losses arising from the use of the contents of this report, and readers are therefore cautioned to use the information contained herein at their own risk. In fact, readers would do well to seek the advice of a qualified independent advisor. The author certifies that all of the views expressed in this report accurately reflect his personal views about the subject company at the time of writing this report. Feedback / brickbats may be hurled at the author at