This Company News Update covers: the USA Market; Hospital Sales; Patents; our new Global Structure and; Distribution Outside Australia and the USA.
MediKane has now registered a subsidiary in the USA. Its sole purpose is to grow sales in MediKane’s largest potential market.
Diabetes is a major problem in most developing countries and the largest populations of people living with diabetes are in India, China and the USA. The USA is the biggest opportunity although both India and China have larger diabetic populations. because the communication network and the physical distribution network in the US is significantly more effective than in either India or China. In the USA there are 5.2 million people currently living with diabetes, taking oral drugs and actively looking for safe, natural alternatives to pharmaceutical products.
The situation related to selling the hospital product is the same, in terms of infrastructure. In addition, the US population is more affluent in general and better able to afford to purchase MediKane products.
Hence the establishment of MediKane USA LLC.
MediKane was also fortunate in being able to employ an ex-Diabetes Australia executive, who has an extensive US and global network into the “diabetes world” and is also a US citizen.
The market plan for the US has been developed at a high level and is currently being detailed. In principle, MediKane will release both the diabetes and hospital product in the north east (Tri-state area) of the United States immediately. MediKane USA will manage a local sales force for the small (geographic) market area. Note this “small geographic area” has many times the population of Australia.
MediKane USA will also appoint distributors for this market and ultimately for the West Coast market which has recently been assessed.
The recent assessment revealed that:
- There is a definite opportunity for an effective and proven natural diabetes product
- No product that performs like NutriKane D was observed in the USA, even with an extensive review
- There is a sea of competitors – they make claims but no significant substance or clinical evidence
- Price points are high enough to provide MediKane with a high Gross Profit
- NutriKane will have a significant price / margin advantage in the key weight management category
- Communicating to consumers is very different to Australia
- All US products must have a great taste and mouthfeel
For this reason, over 45% of MediKane’s profits will be sourced from the US market, and hence the focus.
In April 2017, the first sales of NutriKane+ have been made to both a New South Wales hospital and an East coast distributor. This is a major break-through as the “sales cycle” for hospital products is typically 18 to 30 months.
Several hospital sales people have now been engaged in Australia and this is being repeated in the USA — New York area initially.
MediKane’s IP strategy is to keep technical developments confidential until a decision to patent is made. This is normal practice. MediKane is and will patent technologies and breakthroughs that will provide high returns to the business. To date, MediKane and our patent attorneys have achieved quite remarkable patent claims, particularly as the key raw materials have been used in industry and studied for many decades, in one case, used commercially for over 2,000 years. In spite of this MediKane was able to demonstrate “novelty” in application of these common raw materials.
MediKane took considerable advice, mostly from PwC about the corporate structure.The overall structure is now as shown in the adjacent diagram.
This structure provides flexibility in the future if a global company makes an offer to either purchase MediKane Holdings, or just the IP or indeed licence the IP.
MediKane USA LLC was also subject to considerable advice from both PwC and US tax and corporate lawyers. It has been structured to allow maximum flexibility for US investors and to minimise total tax. As we are trading in both Australia and the USA this must be managed carefully as both countries laws must be met and used to avoid “double dipping” as much as possible.
Distribution outside Australia and the USA
Many enquiries and requests are being received from distributors and potential customers in many countries. MediKane is not in a hurry to sell outside Australia and the USA as we are not properly resourced to manage these various regions. However it is difficult to ignore any request for a sale!
We have products being commercially used and trialled in:
Turkey; Ghana; New Zealand; South Africa; Sri Lanka; India; China; Singapore and; Thailand.
MediKane policy is that when a local agent is identified who can manage 95% of the activities required to launch in a foreign country, it will be formally evaluated and possibly approved. MediKane is not searching for suitable agents, but evaluating proposals that are received. This is a good position to be in and will serve the business well in the future, when resources are expanded. It does the demonstrate considerable demand for MediKane products and also the fact that NutriKane’s efficacy is extremely rare in the natural medicinal product area. ie we have very few genuine competitors.