Medigus signs Chinese reflux device deal

Sinopharm will buy products from Medigus for $17.6 million over four years, subject to regulatory approval.

Medigus Ltd. (TASE:MDGS) CEO Chris Rowland today announced an extension of his company's distribution agreement with Chinese company Sinopharm, managed by the Chinese government. The previous agreement was signed nearly two years ago, and meanwhile regulatory approval for marketing Medigus's system in China has not been obtained. Medigus develops medical equipment.

Under the revised agreement, Sinopharm will be the exclusive distributor in China of Medigus's Muse system for four years after regulatory approval is obtained there. The Chinese company undertook to buy systems and accessories for them from Medigus for a total of $17.6 million during the exclusivity period. Medigus will receive a $350,000 advance, which will be refunded to Sinopharm if regulatory approval is not obtained within two years.

"Effective treatment of the disease with no invasive surgery, which can improve the quality of life for gastroesophageal reflux disease (GERD), while saving money for the health system, is a growing need in this market," Rowland said. "The revised agreement is a vote of confidence in the commercial potential of the Muse system and its ability to supply this need, as well as a commitment to Medigus, as reflected in the quadrupling of the payment in the original agreement and the potential quantities to be ordered."

The Medigus share is traded at a NIS 70 million market cap. The company recently reported that it plans to have its shares listed for trading also in the US.

Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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