Unilife Corporation (NASDAQ:UNIS) is an innovative medical devices company that has focused on a niche, which is expected to grow significantly as the aging population of baby boomers develops an increasing need for medical technologies and care. Unilife focuses on the development and production of innovative drug delivery systems, saving pharmaceutical companies the research and development expenses involved with delivery systems and allowing them to focus on drug development.
The company's name recognition has been rapidly growing following the deal with Sanofi-Aventis in 2011, which Alan Shortall, founder and CEO of Unilife, who gave an interview to Gregg Greenberg at The Street would give the company a shot at a wider market. Sanofi paid $40 million for the exclusive rights to negotiate to purchase pre-filled syringes from Unilife for two therapeutic classes, for anti-thrombosis and vaccines.
In an interview with Fox Business last summer, Mr. Shortall said that one of the reasons he is bringing Unilife's manufacturing back to the United States is because of the "wonderful reputation for high quality medical devices" due to the stringent regulations in the U.S., which gives the company credibility for high-quality products. While many companies complain about regulations, Shortall says "this is one time we actually embrace them because it makes us better, and consequently we can sell our products anywhere in the world because they're recognized as being the best."
The prefilled syringe market is growing at a rapid rate, because it significantly reduces time and cost of pharmaceutical delivery. Not only does this reduce time spent by nurses measuring and administering injectable drugs while cutting the cost of packaging by reducing the product to a single one-step primary package. This, in turn, also cuts the amount of pharmaceutical waste and therefore bio-hazardous material removal costs.
Another advantage for the company is that since Unilife only produces the primary packaging in compliance with all regulations, the pharmaceutical companies themselves are required to do the stability tests once the syringes are filled with their products. This means there is no risk to Unilife from regulatory disapproval.
Unilife is currently trading at $2.49 a share, less than half its 52-week high. Talks of a partnership in the recent earnings call could mean that the company is back on track to reach those highs. Analysts have a consensus 12-month target price range of $5.50, calculated by estimating future EPS and then applying the P/E ratio. This is supported by forecast earnings growth of 25%, beating the industry average of 7.6%. UNIS provides an excellent opportunity for an investor looking for moderate risk/reward.
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