The Medical Developments International Ltd (ASX: MVP) share price has risen 3% today after announcing an exciting deal.
Management announced that it has finalised a 'ranging' deal with Walgreens in the USA. Walgreens is the second largest pharmacy store chain in the US, with nearly 9,000 outlets. Walgreens Boots Alliance Inc is the largest pharmacy business in the world.
In addition to finalising the deal, Walgreens placed the first order for stock and is distributing Medical Development product onto the pharmacy shelves.
The deal is to supply the Compact Anti-Static Space Chamber to 2,000 Walgreens stores, which will be supplied through AmerisourceBergen. Management expect the deal will grow the Space Chamber category in the 2,000 allocated stores and create a case for its products to be rolled out to all Walgreens stores.
Medical Developments CEO, John Sharman, said "Medical Developments has been working towards securing a Ranging deal from Walgreens for almost two years. In addition to Walgreens, we recently added 235 stores from the Meijer pharmacy store chain in the US. This deal is for three products from the Compact Anti-Static Space Chamber range to be placed in every store, via McKesson".
"Part of the reason Walgreens entered this deal is because we are gaining rapid acceptance for the quality of our product and our product offering amongst pharmacies in the USA. We have a world class respiratory system device product range and we have a significant price and reimbursement advantage over competitor products in the USA. We are confident our USA business will deliver the expected sales growth in the future".
Foolish takeaway
This is yet another positive update from Medical Developments and it looks like it is on course for rapid earnings growth over the next few years.
The major issue I'd have with investing today is its huge valuation, it's currently trading at 252x FY17's earnings. According to analysts' estimates it could be trading at 31x FY20's earnings, which still isn't cheap. It also comes with a grossed-up dividend yield of 0.73%.
