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Why the Medical Developments International Ltd share price jumped higher today

Fresh from a 5% gain on Friday, the Medical Developments International Ltd (ASX: MVP) share price has continued to climb higher this morning.

At the time of writing the fast-growing healthcare company’s shares are up 3% to $5.21.

What happened?

This morning Medical Developments International announced that it has signed an agreement with CSIRO which will see the two parties develop new manufacturing technologies for pharmaceutical products.

The agreement extends the healthcare company’s existing partnership with CSIRO and will aim to develop the next generation of manufacturing technologies to make small molecule pharmaceutical products at a significantly reduced cost and improved quality.

According to the release Medical Developments International will invest up to $3 million in the project over three years.

The company will pay 60% of the costs in either cash or shares. The remaining 40% will be paid in cash but CSIRO will invest this portion of the fee by way of purchasing share options.

These options will be unlisted and will have a term of 10 years. CSIRO will be able to exercise them when a developed technology has been proven to be commercially viable.

Which may not be far away considering work has already begun and preliminary results have proven to be very encouraging according to management.

Should you invest?

As I said last week, I believe Medical Developments International is up there with fellow healthcare shares Ramsay Health Care Limited (ASX: RHC) and Nanosonics Ltd (ASX: NAN) as a great long-term buy and hold investment idea.

Although its shares are expensive, the strong growth prospects of its Penthrox pain management product go some way to justifying the premium. As does this promising partnership with CSIRO.

Finally, if you like buy and hold investments like Medical Developments International, then I would suggest you consider these quality buy and hold investment options as well. I'm tipping them all for big things in the next few years, which could make it an opportune time to invest in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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