SMALL CAP SHARE IDEAS: MedaPhor proves good things come in small packages
One only has to look at the evolution of the smart phone to realise that a lot can packed into a very small box.
Indeed, we are now at the point where the majority of the nation is walking around with a small but very powerful computer tucked away in their inside pockets.
The mania for putting big things into small packages doesn’t start and end with the likes of Apple or Samsung.
Revolution: Ultrasound devices are now palm sized
Perhaps prompted by the success of their fleeter footed gadget makers, companies such as GE are now shrinking their own technology.
For example, a revolution of sorts is occurring in ultrasound where devices are now palm size and cost in the low thousands of dollars, or even, in some cases, the high hundreds.
Now these aren’t the all singing and all dancing pieces of kit used by specialists to hunt for the tell-tale signs of disease.
They are more suited for a casualty doctor attempting to determine whether a crash victim has internal bleeding.
Their price point means they are becoming ubiquitous in casualty wards and emergency rooms around the world.
'Ultrasound is the stethoscope of the future,' says Stuart Gall, of MedaPhor, whose technology helps doctors learn to use these devices.
'So, where every doctor now has a stethoscope, they could in future have a small, hand-held ultra-sound device.'
The revolution has created something of a problem for the medical profession; there just isn’t the manpower to train the professionals that might use these devices.
At the same time, patients are becoming more reluctant to volunteer as guinea pigs for a novice junior houseman.
This bottleneck – and be in no doubt it is a problem hospitals are acutely aware of – has created an opportunity for recent AIM listing MedaPhor, maker of the ScanTrainer.
Developed at the University of Cardiff medical school, it is part medical device and part computer that acts much like the medical equivalent of a flight simulator for the rookie doc.
The physical interaction is virtually identical to that felt if the physician were examining a patient, while the images are real scans archived over a number of years.
MEDAPHOR AT A GLANCE
AIM ticker: MED
Value: £11.5million
Shares listed at: 50p
Currently trading at: 57p
Not only does ScanTrainer replicate the whole ultrasound experience, it is able to give pointers on how to carry out the particular scan optimally.
Gall describes it as the equivalent of having the world’s leading golf pro at your shoulder during a session on the driving range, who is showing you exactly how to get the perfect swing; the big difference being that medical examination can be a matter of life or death.
Crucial in the bid to alleviate the training bottlenecks, the technology has the ability to assess the trainee objectively to ensure he or she achieves the minimum standards required.
The MedaPhor CEO believes the group currently makes the best ultrasound simulator in the world – and it has sold over 100 of these £15-70,000 units to date, mainly to hospital obstetrics and gynaecology departments.
The recent IPO brought in just under £5million, which is being used to expand its sales network - a combination of direct sales in the UK, Europe and the US, along with a reseller network in the rest of the world. China, Japan and the Middle East are important future markets.
Gall believes it was important to keep control of the key UK and US sales territories in-house.
Its target market here in the UK is estimated at around 250 hospitals. To date most of its efforts have been targeted at the obstetrics and gynaecology departments.
However, the radiology and emergency medicine products should significantly enhance the product’s market potential. The first radiology system was launched at the beginning of the year to excellent reviews and the new emergency medicine product is due imminently.
Sales made to date reveal senior physicians are receptive to the technology, despite the backdrop of major budget cuts within the health service.
The City experts who followed the MedaPhor IPO and crunched the numbers see the business hitting profitability in 2017 on its current trajectory.
The listing gives the group the much needed cash injection to get to that level.
It also affords it access to the equity markets should an opportunity arise to expand the business or the product offering.
CEO Gall concludes: 'There is definitely potential at some point to bring some of the gold standard simulation companies together.'
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