Bone regeneration firm Osteopore moving into China with Shanghai-listed Kontour Xi’an

Wed 24 Aug 22, 3:35pm (AEDT)
An educational model of a human skeleton modified into a thoughtful pose
Source: Unsplash

Key Points

  • Osteopore has executed distro agreement with China’s Kontour Xi’an, with products for skull surgery to be the first products sold
  • Kontour will pay for all licencing and compliance costs for Osteopore’s full fledged registration with Chinese regulators
  • The four year contract sees Osteopore set to receive some $1.4m in FY24; over $750,000 in FY23
  • One week returns for Osteopore shareholders up 19.5%

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. 

What does Kontour do?

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%.

Existing reach with Chinese hospitals

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. 

Prime location

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. 

Significant step: management 

“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.”

Osteopore's six month charts
Osteopore's six month charts


Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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