MedAdvisor signs joint venture deal with Asian healthcare giant

Australian-based MedAdvisor (ASX: MDR) has entered into a 50:50 joint venture with healthcare services giant Zuellig Pharma Holdings to launch its smartphone medication management application to a market of over 560 million people in Asia.

Under the terms of the exclusive licencing deal, MedAdvisor’s app will be marketed to Zuellig’s network of over 350,000 pharmacies, medical clinics and pharmaceutical manufacturers, commencing in 2020.

MedAdvisor will license its core intellectual property on an exclusive, royalty-free basis and develop localised, multi-lingual versions of its app for pharmacies and patients across 13 targets markets, some of which are non-English speaking.

The company will retain ownership of all intellectual property in the app, including customisations for specific countries.

The joint venture with Zuellig will initially be launched in the Phillipines and South Korea, which have been estimated to comprise a combined 48,000 pharmacies.

It follows the signing of a co-marketing and licencing deal between MedAdvisor and a US pharmacy software company in June.

Medication management

The MedAdvisor digital management app has the potential to help millions of people manage their medications safely and effectively.

Available free on mobile and internet devices, it incorporates a host of features including reminders and pre-ordering of prescriptions, which combine to improve adherence to common medications by approximately 20%.

Chief executive officer Robert Read said the Zuellig deal is one of the most significant developments in MedAdvisor’s history and has the potential to assist millions of new users.

“Zuellig is one of the largest healthcare businesses in Asia [and] is the perfect partner to take our offerings into the region,” he said.

“Pharmacies have an essential role in providing healthcare to the community and we are committed to helping them serve their patients better.”

Self-sustaining JV

MedAdvisor has committed to investing a set level of working capital – equating to less than 10% of its current cost base – into the joint venture during 2020 which will be matched by Zuellig Pharma.

It is expected the initial investment will be sufficient to make the joint venture self-sustaining, with both parties set to receive fees for assisting with sales and ongoing technical support.

Mr Read said the joint venture will generate multiple revenue streams including software as a service (SaaS) subscription fees from pharmacies; transaction-based revenues such as SMS reminders, online payment processing fees and electronic script requests; and program fees from pharmaceutical manufacturers for the delivery of digital patient engagement programs.

Billion dollar business

Zuellig Pharma runs a $16 billion business providing healthcare services to Asia’s medical industry and working with more than 1000 corporate clients, including the world’s top 10 pharmaceutical companies.

The pharmaceutical spend across Zuellig’s addressable population of more than 560 million people is estimated to be around $93 billion.

Patient engagement programs

Zuellig’s medical network is expected to make a significant contribution to the continued growth in MedAdvisor’s patient engagement program initiative, which aims to provide pharmaceutical companies with the opportunity to distribute critical medicinal information to their customer base.

PEPs deliver relevant content to patients for scripted and non-scripted medications and have been shown to lift medication adherence success rates by over 30%, leading to better health outcomes.

Earlier this month, MedAdvisor reported strong growth in its PEPs, entering into new agreements with two of the world’s Top 10 pharmaceutical manufacturers in addition to 33 active programs currently being utilised by 16 client companies.

MedAdvisor confirmed it would target further growth of its PEPs as its potential audience reach increases in line with its patient network.