This is why Biosensors International will suffer a slump in licensing revenues

Just wait for its upcoming results.

According to OCBC, during Terumo Corp’s (Terumo) recent 2QFY13 results, a disappointing note came from the sluggish sales performance from its Nobori® drug-eluting stent (DES) in Japan.

Here's more from OCBC:

We expect this to translate into weaker licensing revenues for Biosensors International Group’s (BIG) upcoming 2QFY13 results (7 Nov after market close). As a recap, Terumo licenses BIG’s DES technology in exchange for a royalty fee.

The revenue slowdown in Nobori® in Japan can be attributed to market share loss due to the launch of new products by three competitors (including Abbott Lab’s XIENCE PRIME™ DES) and a downward revision of the National Health Insurance’s reimbursement prices (~15%).

Nevertheless, one of Terumo’s key initiatives in 2HFY13 is to regain its Nobori® market share in Japan by re-accentuating its competitive advantages such as its proven long-term safety and efficacy track record and superiority in the treatment of particular lesions.

Meanwhile, there could also be some softness in BIG’s sales from Europe, given the weak macroeconomic environment, although we believe that BIG remains well-positioned to capture market share from its competitors.

We pare our FY13/14F revenue forecasts by 2.7/4.0%, and our core PATMI projections by 3.7/4.3%. We also lower the USD-SGD assumption in our model (US$1 = SG$1.22, previously S$1.28).

BIG recently announced five-year results from the LEADERS trial at the 2012 Transcatheter Cardiovascular Therapeutics (TCT) symposium, an important interventional cardiology event.

Long-term clinical outcomes for its flagship BioMatrix Flex™ stent system were favourable. We expect this to drive BIG’s continued market share penetration moving forward.