Biotech company Zoono (ASX: ZNO) is setting up a distribution company to sell its products including swine flu treatments to farmers, food producers and processors in China.
The move follows six months of trials across several animal health industry sectors and will be a joint collaboration with a group of leaders in the Chinese agribusiness/veterinarian and animal feed sector.
Under the collaboration, a new entity will be formed to act as Zoono’s exclusive distributor for China’s animal health and agribusiness sector. Zoono has licenced this distribution company, Zoono China International Trading, to use its name and sell its products.
The news follows the company’s announcement on Monday that its microbe shield, ZOONO Z71, was found in laboratory and field testing to be “extremely effective” in counteracting the African Swine Fever virus.
One of the key focuses of the new distributor will be the use of Zoono’s products to minimise the impacts of the virus within China’s pig population.
Zoono’s other antimicrobial products include sprays, skincare wipes and foams, surface sanitisers and mould remediation treatments.
The newly inked distribution deal is for an initial 10-year term with minimum purchase volumes of: NZ$3.1 million (A$2.98 million) in the first year (including NZ$1 million in instalment payments); NZ$4.6 million (A$4.42 million) in the second year; NZ$ 9.3 million (A$8.94 million) in the third year and increasing by 10% per annum thereafter.
Zoono said initial orders have been placed with further orders for NZ$300,000 (A$288,304) required to be made under the agreement in January, March and June 2020.
This latest deal is the third distribution agreement Zoono has entered in the Chinese market in the last four months and aligns with the company’s goal of revitalising its global distribution strategy, primarily to achieve greater control of its distribution arrangements.
“In the key China market, it was decided to focus on the appointment of reputable distributors with specific expertise in discrete market segments rather than for the country generally,” it stated.
Zoono said in its new arrangements, it has sought to exercise greater control over the activities and performance of its distributors with respect to pricing, marketing strategies, minimum sales performance, service and delivery standards and intellectual property and brand protection.
Swine flu epidemic
According to the World Organisation for Animal Health, about one-quarter of the world’s pig population is expected to die as a result of African Swine Fever.
China is home to world’s largest pig population and data from the country’s agricultural ministry in July showed it has lost more than 100 million pigs to the virus in the last year.
Zoono shares were up 23.44% at $0.395 by afternoon trade.