Global biotech company Zoono Group Limited (ASX: ZNO) has reached an agreement for joint collaboration and the exclusive distribution of its animal health and agribusiness sector products in China.
The deal with an un-named group of leaders in the Chinese agribusiness/veterinarian and animal feed sector, follows six months of trials.
Zoono has licensed the distribution company, Zoono China International Trading Limited, to use its name and sell Zoono products to farmers, food producers and processors in China.
Paul Hyslop, Zoono’s Managing Director, said that importantly, one of the key focuses of the new distributor will be the use of Zoono products to minimise the impacts of African swine fever within the pig population in China.
This initiative builds on the recent success of Zoono Z71 Microbe Shield in laboratory and field testing in combatting the African swine fever virus,” Mr Hyslop said.
The material terms of the new distribution agreement are:
- An initial 10-year term;
- Exclusivity in all animal health markets including aquaculture and food processing plants in China;
- Minimum purchase volumes of: NZD$3.1 million in year one, including NZD$1 million in instalment payments between execution of the agreement and 30 June 2020. NZD$4.6m in year two; and NZD$9.3m in year three, and thereafter increasing by 10% per annum;
Initial orders have been placed, with further orders for NZD$300,000 required to be made under the agreement in each month of January, March and June 2020.
Mr Hyslop said the new agreement for animal health and agribusiness in China is another step in the strategy embarked on approximately 12 months ago by the Zoono Board to revitalise the Company’s 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,” he said.
“In its new distribution arrangements, the company has also sought to exercise greater control over the activities and performance of its distributors, particularly with respect to pricing, marketing strategies, minimum sales performance, adherence to service and delivery standards and protection of the Company’s intellectual property and brand.”
The new agreement is the third distribution agreement entered into by the company for an industry sector in the Chinese market in the last four months.
