GOVERNMENT backed scientists have helped multiply the market value of a previously small Australian pharmaceutical company by 30 in seven years.
Medical Developments International Ltd (ASX: MVP) has increased in worth from less than $10 million dollars in March 2010 to more than $306 million at time of press.
The company makes Penthrox, a non-narcotic, non-addictive pain relief medicine based on Methoxyflurane.
A colourless liquid that becomes a vapour when inhaled through a custom-built inhaler informally called 'green whistle', Penthrox is said to reduce rather than eliminate pain within ten breaths and has been used by Australian emergency health carers for more than 30 years.
In May 2015, CEO John Sharman described the drug's approval in the United Kingdom, Ireland, France and Belgium as "the most significant event in the company's history".
"In these four countries there are more than 50 million accident and emergency hospital attendances each year and we estimate these markets for Penthrox to be worth circa $100 million per annum," he said in an ASX announcement at the time, while chairman David Williams said the company was ready for globalisation.
Plans for expansion into Germany, Italy, Spain, Russia, Saudi Arabia, Israel, Singapore, Hong Kong, Malaysia, Mexico, Taiwan, Iran and the United States were announced almost immediately, followed by a then-peak share price of $2.56.
But while massive growth in expected demand was welcomed by shareholders, the company needed significant improvements in technical and chemical production to fulfil future contracts.
"Small to medium companies generally don't have a lot of cash to do the research," explains Paul Savage, Biomedical Research Director of Australia's official scientific body, the Commonwealth Scientific and Industrial Research Organisation.
"At the CSIRO, we can partner with those companies to do the research.
"We share the costs and the rewards but being a government body, the economic risk is quite small."
Dr Savage says three CSIRO scientists were employed at any one time over the past six or seven years to focus on developing Penthrox for globalisation and while breakthrough designs will likely be patented by MDI, Australian taxpayers will be rewarded with impressive royalties in the next financial year if sales deliver to plan.
"This is an example of how we like to work with companies," he says, "we have had similar sorts of projects with over a hundred other bio companies over the past decade".
"It's difficult to be competitive in manufacturing and in Australia we're transitioning from high volume commodity exports to lower volume, higher margin industries.
"Our key task is to help Australian industry grow and some of the money from these types of deals will go back into innovative and cutting edge technology research."
A new MDI factory in East Melbourne is "just up the road" from a CSIRO branch, says Dr Savage, and director of research and operations Scott Courtney has described the CSIRO team as an extension of the MDI family.
The new plant includes a research and development lab as well as facilities for quality control, a task previously outsourced to overseas labs.
Sharman says he expects the company's workforce "to grow considerably over the next 12 months" after 26 new jobs were reportedly created alongside the factory's construction.
MVP shares are trading at $5.20 per share at 10am AEDT today.
Business News Australia
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