Do you know how one of the main selling points of blockchains and crypto is that there are no middlemen with their noses in your business? That prospect is just as attractive in everyday business. Medical regenerative solutions company Osteopore (ASX: OSX) has acquired multiple medical distribution businesses and has now become a vertically integrated company. It controls the end-to-end process, from its manufacturing and marketing to direct retail sales, thus removing the middle trader layer.
Osteopore—a Singapore-headquartered company present in Australia, Asia, Europe and America—has entered into a binding asset purchase deed worth $2.05 million with Mr Lim Jae Hoon, a vendor and medical devices marketer with over 30 years of experience. As per the deed, Osteopore will acquire medical distribution businesses run by Lomic Korea Co., Ltd, 3D Aesthetic Solutions Pte Ltd, 3D Healthcare Solutions Co., Ltd and 3D Aesthetic Medical Equipment and Supplies Trading. These businesses are responsible for up to 45 per cent of Osteopore’s sales globally.
Commenting on the acquisitions, Osteopore’s CEO, Goh Khoon Seng, said, “The potential benefits of this are highly encouraging, including the immediate creation of a proven direct sales team, direct access to an extensive network of hospitals and surgeons, along with the anticipated benefit of supercharging revenue and increasing margins.”
The sales are primarily related to the aesthetic market in South Korea, complemented by sales in Singapore, Thailand, Vietnam and the Philippines. Through this agreement, the Company hopes to boost its revenue and margins, as it will sell full-priced products direct to customers, instead of selling wholesale to the Target Businesses. The agreement is also a bid to become profitable faster while maintaining steady organic growth.
Historically, these businesses made up 50 to 60 per cent of the Company’s total sales revenue until Covid hit. Then, their share dropped dramatically to 40 to 45 per cent. Now, as Covid subsides, patients are heading to hospitals seeking treatment, which has led Osteopore to achieve four consecutive quarters of revenue growth. In particular, the Company is witnessing strong demand for rhinoplasty applications within South Korea.
As per the agreement, the Company will create a dedicated sales team that can tap into the local markets. Plus, it will create an internal business development team with deep expertise in the aesthetic segment so that Osteopore can enter the global aesthetic market in 2023—expected to be valued at $46 billion by 2030.
Osteopore’s Executive Chairman, Mark Leong, added, “We are enthused as this transaction marks our first acquisition since listing on the ASX, adding complementary synergistic value and exciting organic growth to complement the strong traction seen to date. This sets us on an accelerated path towards positive cashflows.”
What’s more? This is not the Company’s last acquisition for now. Osteopore is considering other potential acquisitions in the 20 countries selling its products, including Singapore, South Korea, Malaysia, Indonesia, the US and others. Osteopore has total self-dependence on its agenda—kind of like its biodegradable implant technology that uses the body’s natural regenerative ability to rebuild lost tissue.
Despite Osteopore’s consistent revenue growth over the past year and new acquisitions, shareholders have remained sceptical. In the last quarter, the Company’s share price has taken a plunge, falling from 28.4¢ on September 12 to 13¢ today. Will these acquisitions provide some reassurance or are shareholder concerns directed elsewhere?
Alinda is a Business Reporter for The Sentiment
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