ASX-listed Osteopore (ASX:OSX) has this week revealed its entrance into the Chinese market with distributor Kontour (Xi’an) agreeing to purchase $0.72m of Osteopore’s products in the next twelve months for sale into the Chinese market.
In the second year of the agreement, Kontour will purchase $1.45m of Osteopore product, assuming healthy demand through the first year from Chinese consumers.
Ahead of that second year revenue, Kontour and Osteopore will complete a number of trials to achieve approvals from Chinese government healthcare market regulator National Medical Products Association (NMPA).
Kontour is listed on the Shanghai Stock Exchange and boasts a market value of $711m.
The company manufactures and sells surgical supplies, including products for neurosurgery, as well as tools specifically designed for bone-based interventions, including cranial surgery and rib surgery.
Cranial surgery products (read: skull surgery) will be the first products bought by Kontour.
With Osteopore specialising in solutions for tissue regeneration and bone healing, the synergy between the two players is clear.
That link is also clear to market pundits, with one week returns for Osteopore currently up 19.5%.
Kontour was selected by Osteopore due to the former’s existing relationship with hospitals throughout China, including distribution networks and warehousing arrangements.
In December last year, Osteopore saw the Hong Kong medical product regulator approve its product range, effectively giving the company approval in the jurisdiction.
That approval allows Osteopore, with the help of Kontour, to ramp up its marketing and distribution of products into China’s Greater Bay area.
The Greater Bay region contains 5% of China’s total population, and includes Hong Kong and Macau, as well as mega cities including Guangzhou, Shenzhen, and Guangdong; all industrial and commercial hotspots.
The distribution agreement went live this week and is fixed for a term of four years with an option for an additional one year extension come 2026. Either party may terminate with two months’ notice.
Kontour will pay the cost of all administrative approval requirements, and product licences and registration will be retained under the full ownership of Osteopore. The latter also retains its right to terminate the agreement without notice if approvals procedures take longer than two years.
“The large Chinese market will be very important to Osteopore…we are laying the groundwork to enter the Chinese market and working with the right partner is essential,” Osteopore chairman Mark Leong said.
“We are glad to begin our partnership with Kontour, starting with our craniofacial products.”
Kontour’s General Manger, meanwhile, highlighted Osteopore’s strength in designing absorbable implants.
“The Osteopore bioresorbable implant is the first of its kind of be successfully commercialised for surgical use,” Kontour GM Alan Zhu said.
“The implants can dissolve over time, leaving only healthy bone.”
“Osteopore implants are complementary to Kontour’s neural closure product portfolio and can benefit Chinese craniotomy patients in the long term.”
Get the latest news and insights direct to your inbox