Board of Directors - Opto Circuits

PRODUCT
PROFILE
can utilize Eurocor's distribution network which is in 36 countries to
enhance its reach to distribute its products.
Financial
Opto has designed a unique method of payment for the acquisition of
Eurocor which is based upon certain milestones achieved by Eurocor.
Opto paid 4.18mn Euros upfront for the acquisition and further
0.5mn Euros paid in two installments of 0.25mn Euros on March 31,
2006 & another 0.25mn Euros payment on June 30, 2006.
Subsequently, if Eurocor achieves a turnover of 10mn Euros by
February 2007 Opto will pay 60% of the turnover in excess of 10mn
Euros. The amount so payable will be restricted to 3mn Euros.
Thereafter, should the company achieve a turnover in excess of 20mn
Euros for a 12-month period ended February 2008, Opto would be
paying 60% of the turnover that is above 20mn Euros. The amount so
payable will be restricted to 3mn Euros. The maximum payment,
which would have to be made, is 11mn Euros. Both, Opto and
Eurocor are confident of achieving the milestones as indicated above.
Opportunity and Strategy
The global market size for stents is estimated to be US$8bn of which
USA comprises of US$4bn, Europe US$3bn and rest of the world
comprising of US$1bn. The stent market is growing at 14% pa. Opto
has recently received CE approval for 2 stents, Taxcor - I and Taxcor-
II, which presents an opportunity to penetrate the non US & Japanese
markets using our distribution setup and low cost manufacturing
advantage. These markets comprise 36 countries and the company
already have product registrations in 29 of those countries. Opto has
signed contracts with 32 distributors in 32 different countries who
would be selling its products. Opto would also be using media like
internet, television, magazines and cardiological seminars to promote
its products.
The domestic market for stents is also very big with over 60,000
stents sold in 2005 which is likely to go up to over 80,000 in 2006.
Eurocor already has a distribution set up in India and the company is
confident of penetrating the markets further. Opto aims to achieve a
5-7% market share for its domestic operations.
In order to remain competitive, the company would constantly invest
in R&D which would help it discover second generation and third
generation stents.
Although Opto is a new entrant and faces competition from
established players like Johnson & Johnson, Medtronics and Boston
Scientific, it is confident of achieving a minimum 3-5% market share
in Europe and rest of the world. Opto and Eurocor are also taking the
right steps to obtain FDA approval for its stents.
Achievements of Eurocor after the acquisition
Eurocor received CE mark approval for four of their products:
Amadeus Supercross-
which is a coronary dilatation catheter,
E-wire a guide wire for intraventional use & an important
breakthrough product 'Taxcor I' which is first of its kind polymer free
Paclitaxel drug eluting stent. The CE mark has opened newer
markets like Hong Kong, Pakistan, India, Taiwan, China, all of
Europe, Middle East, Far East, South America & Africa & Taxcor II-
which is a biopolymer drug eluting stent.
A major achievement from the OCI- Eurocor union is the distribution
agreement has signed with the German/Swiss medical device sales
organization "Fumedica AG". Fumedica AG has taken overall
marketing and distribution rights of Eurocor's entire range of
coronary stent systems and balloon dilatation catheters, for the
German and Swiss market. This was the first major agreement signed
by Eurocor, after it was acquired by OCIL in January 2006.
Another important landmark deal was the signing of a distribution
agreement with a large distributor in Brazil to cover Latin American
markets for marketing its blockbuster drug eluting stent 'TAXCOR'.
The company has also bagged an additional order from Egypt.
In May'06 OCI participated in the Paris Course of Revascularization
(PCR) in France. This helped the company in further accessing newer
markets like Egypt & Latin America.
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