Why the Medical Developments International Ltd share price is surging today

Medical Developments International Ltd (ASX:MVP) shares are on the up again after the announcement of a potentially lucrative deal with CSIRO. Should you invest?

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It has been an incredible year for shareholders of Medical Developments International Ltd (ASX: MVP). Year-to-date the fast-growing healthcare company's share price has risen a whopping 40%.

Much of this gain can be attributed to the launch of its Penthrox non-opioid pain relief product in a number of markets across the world. Penthrox is the green whistle device that has been used for decades by ambulance officers and surf lifesavers for pain relief here in Australia.

In the last few months alone the company has announced licensing deals in Korea and Canada, as well as regulatory approval in France and the UAE.

The company is working hard behind the scenes and I don't believe it will be long until we see Penthrox on sale throughout Europe, the United Kingdom, and the United States.

The good news doesn't stop there though. This morning the company announced a major new deal with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to conduct a research and development program into new manufacturing technologies for pharmaceutical products.

The partnership with CSIRO aims to manufacture existing pharmaceutical products for a fraction of the price. According to CEO John Sharman if the partnership is successful the suite of manufacturing technologies created is expected to be extremely valuable.

Mr Sharman went onto say:

"We will use the knowledge gained from the development of our new Penthrox manufacturing technology to create patentable intellectual property which will be owned by MVP. Our R&D program is very focused and structured and we expect it to show results within two years."

CSIRO will also benefit from the deal through significant royalty revenues should the partnership be a success.

I'm not at all surprised to see Medical Developments International's share price jump 5% to $5.10 on the news. In my opinion this is a company with huge potential and an excellent management team.

It is of course early days and the company will have to grow into its lofty valuation in time. For this reason I would suggest investors limit an investment to just a small part of their portfolio. If it is too high risk for you then industry peers CSL Limited (ASX: CSL) and Mayne Pharma Group Ltd (ASX: MYX) might be better options.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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