Medtech company RhinoMed (ASX: RNO) will soon be significantly increasing its product shelf space in the United States having secured a distribution deal with CVS for its new over-the-counter (OTC) sleep aid product – Pronto Sleep.
With the company forecasting the sleep aids market to reach $66.3 billion by 2021, RhinoMed’s interest focuses on OTC products in the market which has traditionally been dominated by prescription drugs.
As an alternative to prescription drugs, the Pronto Sleep product is a wireless nasal strip which users can apply prior to sleep which releases a vapour of essential oils, selected by the user, directly into the nasal airstream.
The distribution deal for Pronto Sleep will expand on RhinoMed’s existing deal with CVS which distributes their Mute product already to more than 1,930 CVS stores and as a result of the expansion, their products are now stocked on almost 15,000 shelves globally, including Walgreens – CVS’s main competitor in the United States.
Whilst the increased shelf space in the U.S is significant for RhinoMed, the company has plans to further its global expansion with plans to sell their sleep aid products online in China by 2021 before targeting growth in the European market in 2022.
Uptake of their non-drug sleep aid products have seen a steady increase in sales for RhinoMed which reported a 24% rise in revenues to $1.67 million for the half-year ending 31 December 2019, of which 70% of business is coming from the U.S.
This had been driven by a major investment in marketing and promotional activities which resulted in a net loss of $5.3m for the half-year but is expected to deliver long-term results as distribution increases, as evidenced by the new CVS deal.
In the United States particularly, the nasal strip market is a significant one where one of the original OTC products in the sleep aid market – Breathe Right – grew revenues from $2.8m in 1994 to $48m a year later when distributed increased to 98% of U.S drug stores. Breathe Right was then bought by global pharmaceuticals giant GlaxoSmithKline in 2007 for $566m.
Shares in RhinoMed saw a spike in early morning trade to reach an intra-day high of $0.083, a rise of 13.6% on their previous days close of $0.073.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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