Shares in blood flow monitoring technology specialist Deltex Medical Group plc (LON:DEMG) surged in early deals on news of significant progress in South Korea.
The health authorities in South Korea have decided to increase the range of medical conditions for which they will reimburse the cost of using Deltex’s Oesophageal Doppler monitoring (ODM) technology.
Shares rose 5% to 4.2p in the first hour of trading on the news.
Deltex said the authorities had previously pledged to reimburse ODM costs on a narrow range of conditions, but this has been significantly broadened to include all patients with unstable haemodynamics, which includes the vast majority of major and high risk surgical patients.
The South Korean reimbursement system sets the price that hospitals pay per patient for the ODM technology used. The hospital is normally reimbursed 80% of the price by the government with the remaining 20% billed to the patient.
To put this into context, Deltex revealed sales to its distributor in Korea were around £300,000 in 2016, up from around £200,000 in 2015.
The company works on the “razor blade” model, where it essentially makes its money on the disposables – in this case probes, rather than razor blades – associated with the device (an ODM machine, as opposed to a razor), and it revealed its distributor is targeting getting the number of end-user sales up to more than 1,000 probes a month by the end of 2018.
This would equate to sales of more than £600,000 for Deltex, which in 2016 received £5.4mln in income from global sales of probes.
"Deltex made good progress in South Korea in 2015 and 2016 and this reimbursement decision, which is specific to ODM, should allow our distribution partner to increase the installed base and probe consumption level during 2017,” said Ewan Phillips, chief executive of Deltex.
“South Korea is one of the most developed markets for intraoperative fluid management in the world and our objectives are both to expand the market and increase ODM's market share," he added.