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Cellmid Inks Major Japanese Agreement To Boost Hair Growth Product Sales

Cellmid (ASX: CDY) has reached a distribution agreement with Natural Garden, one of Japan's largest private direct marketing companies, for the supply of at least 30,000 units of its Andeprong S FGF-5 inhibitor hair growth lotion.

The deal is a major step towards increasing Japanese sales following its acquisition of Andeprong S and other established Japanese brands when it purchased Advangen Inc. in May 2013.

"Natural Garden is an outstanding partner led by some of the most experienced direct marketing professionals in Japan," Cellmid chief executive officer Maria Halasz said.

"With its long history of successful product launches we are excited of the prospect of continuing product innovation for their loyal customers."

Cellmid had acquired Advangen with the view to grow near term Japanese sales by building on the strong product loyalty and existing customer relationships.

This is highlighted by the deal with Natural Garden, which focuses on leading the market by launching "first in kind" and "best in kind" products.

"We have a keen interest in working with Australian companies developing cutting edge, pioneering products that benefit our 200,000 strong customer base," Natural Garden chief executive officer Masahiro Matsuura said.

"We are particularly looking forward to a growing partnership with Cellmid, given our already strong ties with its Japanese subsidiary, and the progressive product development strategy by management."

Japanese Haircare Market

In 2012, the Japanese haircare market had total revenues of $5.9 billion and it is expected to reach the market value of $6.3 billion by the end of 2017.

A significant component of that spending is for hair growth products.

Since the first sales of Advangen's products based on their FGF-5 inhibition technology, more than 700,000 bottles of the product have been sold in the established Japanese hair growth market alone.

Advangen

Cellmid had acquired Advangen Inc. in May 2013 for $2.89 million in cash and scrip, giving it full ownership of the FGF-5 inhibitor technology platform that underpins its évolis® hair product range as well as immediate access to the established Japanese hair growth market.

Advangen also brought its product development expertise in the hair growth sector as well as market opportunities in China, where import permits are already in place for the Lexilis® and Jo-Ju® branded products.

Analysis

The distribution agreement with Natural Garden, which is led by some of the most experienced direct marketing professionals in Japan and has a long history of successful product launches, should ensure that distribution and sales hit targts.

This will in turn validate Cellmid's strategy to grow its Japanese sales by building on strong product loyalty and existing customer relationships.

It also highlights the potential for its clinically proven FGF-5 inhibitor product range to penetrate the global market for hair growth products, which is estimated to be worth several billions of dollars.

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