As fears over the coronavirus outbreak continue to spread, health and nutritional product manufacturer Eagle Health (ASX: EHH) is set to diversify their distribution channels by entering a collaborative agreement with Amka Products which has a continental footprint throughout Africa.
The agreement will see AMKA, a market leader for manufacturing and distribution of health products in Africa, distribute Eagle Health’s products whilst Eagle Health will do the same in Australia and China for AMKA.
“During my recent visit to South Africa I had the opportunity to spend significant time with the founders and management of AMKA, and witnessed first-hand the depth, sophistication and sheer scale of their operations in the fast growing South African market,” said Eagle Health Executive Director, Gang Xu.
“By working closely with AMKA, a world-class industry player in Africa, Eagle Health is well-positioned to seize best market opportunities and to manage risks in a true global perspective.”
The increase in global distribution will be critical to Eagle Health’s bottom line due to turbulent conditions in China where the Company develops, manufactures and distributes into 26 provinces. Collectively, Eagle Health has more than 300 retail stores franchised across China for the sale of their Eagle-branded range of traditional Chinese medicine and Western nutritional products.
Whilst there has been increased demand for medical products as a direct result of the COVID-19 outbreak, retail strips have been hit hard with significantly less foot traffic as Chinese nationals seek to avoid contamination from high-density public locations.
The 2-year collaborative agreement will not be foreign to AMKA and Eagle Health however, with AMKA’s parent company Holistic Remedies having invested more than AUD $10m in Eagle Health’s IPO in July 2017 as a cornerstone investor.
The new Africa focus will be a welcome sight for EHH shareholders after Eagle Health forewarned that the coronavirus already had made a material impact on the Company which was forced to quarantine employees for 14 days returning to their Xiamen production facility after the Chinese New Year break. Following the regulatory quarantine, Eagle Health expects production to resume as normal by 1 March, 2020.