MCS Medical Compression Systems (DBN) Ltd. (TASE:MDCL) has not renewed the contract of its US distributor Hill-Rom Company, which expires in March 2008. This contract accounts for 90% of MCS’s revenue this year and 74% in 2006, implying that sales will plummet until a new distributor is found.
MCS posted NIS 9.1 million revenue in the first half of 2007, but will probably only report NIS 1 million in sales in both the fourth quarter of 2007 and first quarter of 2008. MCS’s share fell over 16% yesterday on the news.
MCS signed the distribution agreement with Hill-Rom in 2004. In 2006, even before its IPO, MCS said that it was dissatisfied with the contract. MCS CEO Adi Dagan told “Globes” today that Hill-Rom specialized in marketing medical devices to hospitals, but neglected sales to doctors. “If we were to stay with Hill-Rom, our clinical trial, which demonstrated that our product can replace drug therapies, would be meaningless,” he said.
MCS’s product is the ActiveCare DVT anti-blood clotting device for surgical procedures. There are many similar devices on the market, and the company has not been able to achieve substantial sales. The company recently published the results of a comparative trial that supported its claims. Dagan said that the company had initiated talks with other medical devices distributors.
Published by Globes [online], Israel business news - www.globes.co.il - on October 31, 2007
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