Chembio Diagnostics ($CEMI) is the latest diagnostics outfit to pursue new growth in Asia. The New York-based company signed an interesting two-part deal with Malaysia's RVR Diagnostics to expand the reach of its rapid HIV and syphilis point-of-care tests, and potentially others down the line.
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| Chembio's DPP HIV 1/2 Assay--Courtesy of Chembio |
The nuts and bolts of the deal amount to this: RVR will license, distribute and contract manufacture Chembio's DPP HIV 1/2 Assay and DPP HIV-Syphilis Assay. Other products could be added to the deal down the line, assuming they incorporate Chembio's DPP (Dual Path Platform) technology, the companies said in their deal announcement. RVR, which launched as a point-of-care diagnostics distributor for Asia in 2010, will start distributing the Chembio products in 2013.
So what does Chembio get from the deal? The Medford, NY, outfit gets a nonrefundable signature fee and contingency fees based on various milestones. Royalty payments are also included, and RVR will register its manufacturing facility with the FDA and make sure it makes Chembio's tests according to FDA-approved specifications. Also, Chembio gets to source tests from RVR's facility to Chembio customers outside of RVR's exclusive territory in Asia.
In other words, Chembio and its 200 employees gain a cost-effective way to expand the company's offerings and hit the fast-growing Asian market. Chembio has also grown similarly through a partner in the U.S. It markets two FDA PMA-approved, CLIA-waived rapid HIV tests through Alere ($ALR). Separately, Chembio markets another line of rapid HIV tests globally through various government and nonprofit programs.
Finally, emerging markets in Asia and elsewhere offer enormous room for growth for point-of-care rapid diagnostics and Chembio's agreement anticipates that potential. In April, the company raised $6 million in a public offering in a bid to raise money for expansion.
- read the release