Zoono Group (ASX: ZNO) has signed an agreement with Eagle Health (ASX: EHH) to distribute co-branded antimicrobial products and offline retail sales in China to help the country combat the coronavirus outbreak.
Zoono sells a range of antimicrobial products using purified, deionized water and a proprietary “quaternary ammonium antimicrobial compound”.
The move is a response to the ongoing coronavirus pandemic that has swept through China and forced local authorities to implement emergency response procedures including stockpiling of medical equipment and supplies.
A strong governmental response has meant several private-sector companies experiencing heightened demand for products and devices that can help diagnose or mitigate the spread of the virus.
Fighting the coronavirus
Eagle has made an initial order valued at NZD$400,000 for Zoono’s products, with further contract terms potentially extending the deal to eight years in total.
The contract has a three-year term and also includes five-year rights of renewal with minimum purchase volumes of NZD$1.5 million (A$1.4 million) in the first 12 months, NZD$2.3 million in year two and NZD$3.1 million in year three.
Thereafter, the two companies have agreed to increase purchase volumes by 10% per year.
Under the terms of the deal, Zoono’s formulations will carry the Eagle logo and will state that they are formulated by Zoono.
The co-branding arrangement means Eagle will import Zoono’s products in bulk quantities to its facility in Xiamen, China, for packaging, labelling and eventual distribution.
The rationale behind the deal is to widen the distribution of Zoono’s products in China and help support one of the greatest public health emergencies in the country’s history.
According to Eagle, the company has established more than 300 Zhang Lao San exclusive product stores and franchised stores throughout China, with a further 271 distribution partners standing ready to place Eagle’s products into more than 30,000 outlets across the country.
Zoono noted the coronavirus pandemic has generated “unprecedented interest” in its technology and its proven activity against corona-type viruses and bacteria as well as its ability to prevent cross-contamination with its 24-hour to 30-day extended efficacy capability.
Zoono has even claimed that its products are “less toxic than vitamin C and coffee”.
With the agreement now signed, both companies have confirmed they intend to expedite completion in order to ensure products are transported to China as soon as possible.
Eagle stated that it is currently receiving “accelerated co-operation” from local government agencies to expand its pharmaceutical facilities and registrations and thereby facilitate the packaging and distribution of Zoono products.
Chinese authorities are currently prioritising assistance for companies with products and services associated with combating and controlling the spread of the coronavirus – a timely commercial opportunity amidst a growing health emergency.
Given the haste shown by Chinese authorities to bring the coronavirus outbreak under control, Eagle said that following recent dialogue with the local authorities, the company expects appropriate licences to be granted for its Xiamen facility “on completion of inspection in the coming days”.
In a statement to the market, Eagle said that Zoono’s first shipment containing approximately 4 tonnes of product is currently being prepared for immediate airfreight and transport to China.
Following this morning’s news, Zoono shares rose 14% up to $1.91, while Eagle Health shares shot up by 53% to $0.192.