Norwood joins with US company to market anaesthetic

Laser drug delivery group Norwood Abbey (ASX: NAL) has finalised an agreement with United States drug company Ferndale Laboratories over the joint marketing of an anaesthetic product.

The strategic commercialisation deal sees Norwood's laser device and disposable tips being marketed in combination with Ferndale's topical anaesthetic drug, Ela-Max.

Norwood's technology alters the outer layer of skin to enable the local anaesthetic to take effect quickly.

The company's executive chairman Peter Hansen said the key profit driver would be the continued supply of consumables.

He said the forecast margins from the combined sale of disposable tips and the drug would allow Norwood to gain optimum market penetration for its laser device.

In addition, the continued use of the devices in hospitals and doctors' clinics would generate a steady income stream.

"The arrangements with Ferndale position Norwood to place laser devices into the market at minimum cost," Hansen said. "The projected high margins on the consumables are expected to realise strong and sustained future revenue streams from the project."

Ferndale is a privately owned specialist pharmaceutical company based in Michigan. The company's chairman and CEO Thayer McMillan II said the topical anaesthetic had achieved double-digit growth since its market release, with Ferndale confident of continued growth particularly as a result of the latest commercial arrangement.

"Ela-Max is an important product in our portfolio and we believe that our relationship with Norwood has the potential to significantly expand the existing market for our local anaesthetic products," McMillan said.

The companies declined to disclose the details of the financial arrangements.

In a statement to the market, Norwood revealed that market research in the US had found the current market for topical anaesthetics was more than $US100 million annually.

The Norwood/Ferndale product combo is intended to target procedures in which local anaesthetic is currently used, particularly dermatology, plastic surgery, oncology and blood donation.

The statement pointed to an estimated 15,000 US dermatologists and plastic surgeons as potential users of the product, which is to be sold for $US5 per pack.

At the time of writing, about 50,000 Norwood shares had changed hands, with the price slipping 7 per cent, or five cents, to 66 cents.