(MENAFN- ProactiveInvestors - Australia) Universal Biosensors (ASX: UBI) has signed a long term supply and manufacturing agreement with Siemens Healthcare Diagnostics for the exclusive manufacturer of three test strips currently being jointly developed for the point-of-care (POC) coagulation testing market.
Importantly, not only is the deal a major step forward but is also creates a new long term earnings stream for Universal.
The company is developing, in partnership with Siemens, a range of products for the POC coagulation testing market, with the first product â€" a PT-INR testing system used to monitor the application of the anti-coagulant therapy Warfarin â€" expected to be commercially available in 2013.
POC coagulation testing is estimated to be worth over US$1 billion annually and is growing at over 10% per year as a result of the increased use of anti-coagulant therapies such as warfarin and heparin, used to prevent the development of blood clots.
Use of these medications needs to be closely monitored, and currently requires frequent blood tests.
Earnings per strip could be around $0.50 to $1.50, and when you consider there is a target audience of around 7 million, even at testing of once every four weeks, that presents an annual earning opportunity of up to between $45 and $136 million at 100% market share.
More frequent testing of once every week increases revenue earning potential to between $182 million and $546 million annually, indicating extremely strong market potential.
The supply and manufacturing agreement means that Universal will be the exclusive manufacturer of the three test strips currently in development.
The strips will be manufactured at the company's existing plant in Rowville, Victoria. In turn, Siemens will register, market, and sell the products globally.
Apart from the ongoing R&D milestone payments to be received from Siemens, Universal will generate a return on its R&D investment in coagulation testing via its gross margin earned on the manufacture and supply of test strips to Siemens.
Universal will also share in incremental profits generated by Siemens on sales of these products that exceed their current forecasts by a specified amount.
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