Medical Developments International (ASX:MVP) share price on watch after trading update

The Medical Developments International Ltd (ASX:MVP) share price will be one to watch on Friday after the release of a trading update…

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The Medical Developments International Ltd (ASX: MVP) share price will be on watch on Friday following the release of an update after the market close.

What did Medical Developments International announce?

This afternoon Medical Developments International provided an update in relation to its Penthrox European Union (EU) transition activities and current trading conditions.

In respect to the former, the transition arrangements for taking back the distribution rights from Mundipharma in the EU are progressing to plan.

According to the release, progress to date includes the establishment of an EU based legal and corporate structure, contracting of pharmacovigilance and regulatory related service providers, and securing operational infrastructure in-market. The latter includes importation and logistics capability.

In addition, the marketing authorisations previously held by Mundipharma are being transferred concurrently to allow the company to assume control of sales and distribution activities on 1 March 2021.

The company's CEO, Brent MacGregor, commented: "The opportunity in the EU remains strong and we're revisiting our execution strategy, assessing and building on the foundation work done by Mundipharma, including determining where we can deploy a direct or hybrid selling model which brings enhanced control and margin. Europe will be the primary focus of MVP over the coming year."

Trading update.

The first half has been softer for Medical Developments International due to COVID-19 headwinds.

Management notes that following an early COVID pandemic surge in sales, the mild cold and flu season, along with improved community hygiene practices, has depressed demand for respiratory products.

Furthermore, reduced community activity is resulting in fewer ambulance movements and lower demand for Penthrox, which is better known as the green whistle.

Finally, Penthrox Australia sales have been impacted by timing differences associated with the transition from the exiting distribution partner, Mundipharma Australia.

However, overall reported revenue is showing growth. This is the result of accelerated milestone income amortisation from the hand-back of the EU distribution rights from Mundipharma.

Mr MacGregor concluded: "We are looking past these challenges. We expect to see a recovery in Australian sales in the coming months and will build infrastructure for the global growth of Penthrox. The transition arrangements in the EU are progressing well and additional rollouts into unlaunched markets will occur in 2021."

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited. 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 Scott Phillips.

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