Ilex signs Africa distribution deal with Novartis

Ilex Medical will exclusively distribute Novartis blood test kits in 16 more African countries, in addition to South Africa.

Ilex Medical Ltd. (TASE:ILX) has signed an exclusive distribution agreement to distribute blood test kits for Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ) unit Novartis Vaccines and Diagnostics SAS in Africa. Ilex subsidiary Ilex Biotech Ltd. already distributes the kits in South Africa; the new agreement expands the distribution to 16 additional Sub-Saharan countries.

Ilex estimates the market potential in these countries at $50 million a year, based on 2.5 million blood donations a year. It notes that there are one million blood donations a year in South Africa, and 320,000 donations a year in Israel.

The company's sales in South Africa totaled NIS 95 million in 2011, out of its total revenue of NIS 250 million. Sales of Novartis's blood test kits to the South African National Blood Service account for 14% of the company's revenue. The segment is important for Ilex, even though African countries are not usually considered important revenue sources for life sciences companies.

Ilex's primary market is Israel, and it is expanding to Russia and other countries.

Two weeks ago, Ilex announced that it plans to merge its operations with Medtechnica Ltd. (TASE: MEDI), a distributor of medical equipment in Israel, which it acquired in March 2011 for NIS 260 million. Since the acquisition, Medtechnica's market cap has fallen to NIS 146 million, 65% of the acquisition price, reflecting a paper loss of NIS 170 million for Ilex. Ilex's share price has fallen 30% over the same period, and its current market cap is NIS 120 million.

Published by Globes [online], Israel business news - www.globes-online.com - on October 4, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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