Medical Developments International (ASX:MVP)

John Sharman
CEO
Market Cap (AUD): 423.93M
Sector: Health Care
Last Trade (AUD): 6.4 -0.06 (-0.93%)
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1. About

Medical Developments International is one of Australia’s leading specialised healthcare companies. With an industry-leading range of products in the areas of pain management, asthma, and resuscitation, plus veterinary equipment, MDI has supplied healthcare professionals and patients innovative solutions since 1971. MDI is a publicly listed company on the Australian Stock Exchange with both its head office and state of the art manufacturing facilities located in Victoria, Australia. With a strong focus on expanding into international healthcare markets, MDI has established a network of manufacturers and distributors to ensure both quality assurance and supply chain solutions are maintained for servicing and delivering to both the local and international sectors.

2. Business model

 

The Company operates the following divisions:[1]

 

Division

Revenue ($’000)

% of Revenue

% of Profit (before Int, Tax,Dividend & Amort.)

Profit drivers[2]

Pharmaceuticals

$10,246

60.1%

139.5%

  • Revenue was down year on year, gross margins increased 3% to 71%
  • MVP recorded $2.2m as revenue from the amortisation of upfront and milestone payments received as at 30 June 2018
  • Operating Expenses grew 17% for the period. In FY18 MVP experienced increased ‘pharmacovigilance’ costs as a result of expanding geographic sales for Penthrox® and Medical Devices. Marketing expenses also increased because of increased promotional activity in the USA

Medical Equipment

$6,460

36.2%

18.8%

Veterinary Equipment

$755

3.7%

6.4%

Unallocated

N/A

0.0%

(64.7%)

N/A

3. Strategy

 

Key strategies include:[3]

 

Penthrox

Outlook

MVP’s ambition is to globalise Penthrox, and in doing so, make it the mainstream analgesic of choice around the world. That process has begun. Over the next 12 months+ the Company expect to

  • sell Penthrox in 37 countries. The Company expect to make first sales during FY19 for most, if not all, of these new countries. However, the Company expect more material sales growth to commence during late FY19 and FY20 and beyond as the various approvals at hospital level are obtained and the use of Penthrox becomes “mainstream”
  • conclude additional distribution partnership for China;
  • conclude additional distribution partnerships for new countries; including USA and Asia; and
  • progress work on gathering the clinical data needed to submit a “New Drug Application” to the Food & Drug Administration in the USA, and extend the ‘indications for use’ for Penthrox.

 

Respiratory Devices

Outlook

MVP’s ambition is to globalise the sales of its Respiratory Devices. That process has begun. The Company already have partners and make sales in 26 countries.

Over the next 12 months the Company expect to:

  • obtain additional partnership deals in the USA and deliver sales growth;
  • obtain additional partnership deals in other countries around the world;
  • consolidate its position as the largest supplier of Respiratory Devices in Australia;
  • introduce new products; and
  • continue to drive down costs and increase the range and quality of its products.

4. Markets

 

The Company operates in markets including:[4]

 

Industry (Australia)

Industry Revenue (2018)

Growth rate (annual 14-19)

Pharmaceutical Product Manufacturing

$8 billion

(1.9%)

Veterinary Pharmaceutical Manufacturing

$670 million

5.2%

Medical and Surgical Equipment Manufacturing

$4 billion

5.1%

Medical and Scientific Equipment Wholesaling

$18 billion

       3.6%

5. Competition

 

Major competitors include:[5]

 

  • Prana Biotechnology Limited (ASX: PBT)
  • Acrux Limited (ASX: ACR)
  • PharmAust Limited (ASX: PAA)
  • Blackmores Limited (ASX: BKL)

6. History

 

1971[6]   

Commenced Operations

 

2003   

Listed on the Australian stock exchange ASX: MVP

 

2011   

Medical Development International Limited (ASX:MVP) announced in January 2011. It was undertaking a clinical trial in the UK

 

2012   

MVP ASX Release Japanese Licence Agreement

 

2013   

MVP Lodges Marketing Authorisation in Europe

 

2014   

Green Whistle receives regulatory approval in South Africa

 

2015   

MVP completed European Distribution deal with Mundipharma

 

2016   

Penthrox launched in the UK and pricing approval for Ireland

MVP signs respiratory deal in the United States

MVP signs licensing agreement for Penthrox in Canada

Penthrox receives regulatory approval in the UAE

 

2017    

MVP signs Respiratory Device supply deal with Sams Club

Penthrox Launched in France and Belgium and first sales

Penthrox approved in another 22 European countries

MVP signs Respiratory Device supply deal with Sams Club

 

2018   

MVP signs exclusive Penthrox deal for China

Penthrox is approved in Saudi Arabia

Penthrox approved in Spain

Iran Distribution Deal and additional European Approvals

Chairman sells 4.35 million shares

MVP signs major deal with Walgreens in the USA

7. Team

 

Board of directors[7]

           

Mr. David Williams – Non-Executive Chairman

Mr. Allan McCallum – Non-Executive Director

Dr. Harry Oxer – Non-Executive Director (Step down after the December 2018 Board meeting)[8]

Mr. Max Johnston – Non-Executive Director

Leon Hoare – Non-Executive Director

Philip Powell – Non-Executive Director

 

Management Team

 

John Sharman – Chief Executive Officer

Mark Edwards – Chief Financial Officer/Company Secretary

Maggie Oh – Director of Scientific Affairs

Michelle Bradney – Head of Medical Affairs

Chi Wai Ng – Head of Regulatory Affairs

Jake Golding – Head of quality

Scott Courtney – Director of Research & Operations

Alistair Barkhouse – General Manager – Sales and Marketin


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8. Financials

 

2018 Half Year Results Presentation

 

Financial year 2017/2018 (ended 30 June):[9]

 

Division

Revenue ($’000)

% Change

Profit (before Int, Tax, Dividend & Amort.) ($’000)

% Change

Pharmaceuticals

$10,246

(7.1%)

$4,425

(16.3%)

Medical Equipment

$6,460

(1.6%)

$420

41.0%

Veterinary Equipment

$755

0.7%

$259

6.1%

Unallocated

N/A

N/A

($2,881)

(17.5%)

Total

$17,461

(8.0%)

$2,223

(41.4%)

9. Risk

 

Major risks include:[10]

 

Capital risk

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Group does not enter into or trade financial instruments, including derivatives, for speculative purposes.

 

Financial risk

 

Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties. The Group’s exposure is continually monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Trade receivables consist of a large number of customers. Ongoing credit evaluation is performed on the financial condition of these accounts receivable and advance payments are requested where deemed appropriate. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained. Apart from the three largest customers of the Group (refer to Notes 3 and 8), the Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk to any other counterparty did not exceed 5% of gross monetary assets at any time during the year.

 

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.

 

Interest rate risk

The Group is exposed to interest rate risk as it holds cash at floating interest rates.

 

Liquidity risk

The Group manages liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

References

  1. ^ Annual Financial Report 2018, P.50
    https://www.listcorp.com/asx/mvp/medical-developments/news/annual-report-to-shareholders-1978585.html
  2. ^ Annual Financial Report 2018, P. 09
    https://www.listcorp.com/asx/mvp/medical-developments/news/annual-report-to-shareholders-1978585.html
  3. ^ Investor Presentation  2018, P. 16, 21
    https://www.listcorp.com/asx/mvp/medical-developments/news/ceo-roadshow-presentation-1969568.html
  4. ^ http://www.ibisworld.com.au/industry/default.aspx?indid=188
    http://www.ibisworld.com.au/industry/default.aspx?indid=5019
    http://www.ibisworld.com.au/industry/default.aspx?indid=262
    http://www.ibisworld.com.au/industry/default.aspx?indid=353
  5. ^ https://quotes.wsj.com/AU/XASX/MVP
  6. ^ http://www.medicaldev.com/about/
    http://www.asx.com.au/asxpdf/20031210/pdf/3k2h60kmrf7wl.pdf
    http://www.asx.com.au/asxpdf/20110808/pdf/420880tkxtwnm3.pdf
    http://www.asx.com.au/asxpdf/20120523/pdf/426f5y7rn24984.pdf
    http://www.asx.com.au/asxpdf/20131015/pdf/42k0zmb5fllxl4.pdf
    http://www.asx.com.au/asxpdf/20140626/pdf/42qg8npfmyb5q0.pdf
    http://www.asx.com.au/asxpdf/20150914/pdf/43191c60zvfcw1.pdf
    http://www.asx.com.au/asxpdf/20160127/pdf/434lpjvsj7gc3p.pdf
    http://www.asx.com.au/asxpdf/20160809/pdf/43962myftyln2w.pdf
    http://www.asx.com.au/asxpdf/20160912/pdf/43b3m7lgxff45f.pdf
    http://www.asx.com.au/asxpdf/20160909/pdf/43b1ztmtkb9jgj.pdf
    https://www.listcorp.com/asx/mvp/medical-developments/news/penthrox-approved-in-another-22-european-countries-1758019.html  
    https://www.listcorp.com/asx/mvp/medical-developments/news/mvp-signs-respiratory-device-supply-deal-with-sams-club-1649208.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/mvp-signs-respiratory-device-supply-deal-with-sams-club-1649208.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/penthrox-launched-in-france-and-belgium-and-first-sales-1522972.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/mvp-signs-exclusive-penthrox-deal-for-china-1991443.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/penthrox-is-approved-in-saudi-arabia-1992896.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/penthrox-approved-in-spain-1928512.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/mvp-signs-major-deal-with-walgreens-in-the-usa-1800279.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/iran-distribution-deal-and-additional-european-approvals-1894507.html
    https://www.listcorp.com/asx/mvp/medical-developments/news/chairman-sells-4-35-million-shares-1706895.html
  7. ^ http://www.medicaldev.com/investors-media/board-of-directors-management/
  8. ^ https://www.listcorp.com/asx/mvp/medical-developments/news/harry-oxer-to-retire-as-director-2009619.html
  9. ^ Annual Financial Report 2018, P.50
    https://www.listcorp.com/asx/mvp/medical-developments/news/annual-report-to-shareholders-1978585.html
  10. ^ Annual Financial Report 2018, P. 63 - 65
    https://www.listcorp.com/asx/mvp/medical-developments/news/annual-report-to-shareholders-1978585.html