D Medical Industries Ltd. (TASE:DMDC) subsidiary Nilimedix Ltd. has signed a strategic distribution agreement with government-owned China National Pharmaceutical Foreign Trade Corporation (Sinopharm) to distribute its insulin pump in China.
The agreement will come into effect when Sinopharm places its first order, which has not yet been defined, and will be valid for three years with automatic one-year extensions. Both parties can cancel the contract with 180 days prior notice.
Nilimedix and Sinopharm will cooperate in executing a strategic marketing plan to penetrate Nilimedix's products in China. Sinopharm will invest $1.3 million over four years to set up the manpower, technical, and marketing infrastructures at several services centers across China. The companies will also share the cost of a clinical study at a leading hospital in Beijing to obtain preliminary data and present the products in China.
D Medical awarded Sinopharm exclusive marketing rights to Nilimedix's products in China, subject to it buying minimum quantities per year, which will stipulated in the contract.
The International Diabetes Federation estimates that there are currently 43.1 million diabetics in China, and the number is expected to grow to 66.9 million in 2030.
D Medical CEO Efri Argaman said, "This agreement is one of the first and most important pillars for realizing the company's strategy to emphasize the penetration into emerging markets where there the combination of a large market in need and an absence of penetration or proper response by current products. The parties are pursuing their joint effort to obtain regulatory permits in China. We hope to obtain them and begin commercial sales of the company's products in 2011."
D Medical is a holding company whose subsidiaries are developing innovative products for the treatment of diabetes. It owns 93% of Nilimedix.
D Medical is undertaking a share consolidation at a 1:32 ration, ahead of an offering on Wall Street. The share price rose 1.7% by midday to day to NIS 45.57, giving a market cap of NIS 274 million.
Published by Globes [online], Israel business news - www.globes-online.com - on April 28, 2010
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