MGC PHARMA (ASX: MXC) has finalised a deal with Korean cosmetics manufacturer Varm Cosmo worth $40 million.
The deal is set to deliver significant revenues for MGC, expected to be in excess of $3 million of sales per month.
The company has executed a binding terms and conditions agreement for a white-label cannabidiol (CBD) cosmetics product with Korean manufacturer Vram Cosmo.
The deal will generate a minimum of $40 million in total annual revenue to MGC Derma, MGC Pharmaceutical's 51:49 joint venture with cosmetics manufacturer Dr M Burstein Ltd.
Roby Zomer, co-founder and CEO of MGC says the agreement is transformational for the skincare division of the medical cannabis company.
"This watershed milestone supply agreement is transformational for our MGC Derma division and for MGC Pharmaceuticals as a company, and importantly for all our shareholders," says Zomer.
"Varm Cosmo are a great company to partner with to bring our cosmetics product to a wider consumer market."
The deal will see a minimum purchase quantity of 15,000 kgs per month and deliver an immediate revenue stream with a strong gross profit margin to the company.
South Korea is in the top 10 global beauty markets and is estimated to be worth over US$13 billion (AU$16 billion). Facial skincare products account for more than half of the total market share, with $6.5 billion in retail sales and a projected 5.8 per cent average growth rate over the next five years.
JungYoon Hawng, CEO of Vram Cosmo, says the high quality product produced by MGC attracted him to make the agreement.
"We produce the most honest cosmetics in the market," says Hwang.
"Out products contain 1ml of highest purity CBD in the world. Our partnership with MGC Pharmaceuticals gives us the opportunity to enhance our product line, while remaining true to our core beliefs."
Business News Australia
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