IPO likely for new US-Oman joint venture

The joint venture company created by SMSMCo and the Fund, Salalah Medical Device Manufacturing Company, is a fully integrated medical manufacturing capability in Salalah, Oman.

Farley said that the although the first products off the production line are not due until early 2008, demand for product from the new medical manufacturing unit is high and that an IPO could be as early as 2010.

The joint venture is set to tap into the US $800 million a year guide wire market with the product development and manufacture of guide wire products and surgical kits.

"This is a product line with broad applications for interventional medical procedures.

"The guide wire product addresses a growing demand by medical specialists and is a natural extension to SMSMCo's existing products and skills, hence we have been able to deploy so swiftly," said Farley.

"Guide wires are used for percutaneous access procedures (through the skin), cardiac angiographies and angioplasty procedures. They have broad and deep demand by global practitioners and we are confident of success of this product line," Farley concluded.

The Original Equipment Manufacturer (OEM) facility will also invest in research and development.

"Critical is the ability to create prototypes for new inventions. Our joint venture will evolve to do that. It will also evolve to manufacture innovative and existing devices for the world markets," said Farley.

"These goals fit the Omani vision of building in-country value-added manufacturing. Through Oman's Free Trade Agreement, it also allows US and European entities to benefit from low cost labour rates," she added.

According to Farley, medical technology investments are noted for their outstanding performance and she expects a similar performance from a future IPO.

"We expect returns to be no less than the 60 per cent IRR standards, and likely above," said Farley.

Ascent medical technology investments have had an average return on investment of 824 per cent year on year, against an average of 100 per cent from traditional equity and capital markets.

"One of the principal reasons for the high returns, beyond selecting outstanding technologies, is a history of successful IPO's from the US medical technology sector, which connects with a wave of IPO's currently being experienced in the Middle East," she said.