L&K Biomed Secures U.S. Military Supply Contract... Provision to Veterans Hospitals

[Asia Economy Reporter Hyungsoo Park] L&K Biomed announced on the 21st that it plans to increase its factory operating rate to 100% starting next month to secure supply volumes for the U.S. market. Until recently, L&K Biomed increased production capacity by completing the construction of its second plant in Yongin and proceeded with GMP approval and process stabilization work. The current operating rate has been raised to 70%.

L&K Biomed anticipates a rapid increase in export volumes starting in June. They expect the supply of height-expandable cage products (Expandable Cage) to the U.S. to grow.

Despite the provisional injunction case known in the market, the company continues to discuss supply with over 60 dealerships with whom contracts have already been signed. The company stated that it is actively negotiating with global companies despite the difficult situation. The negotiations are currently at an impasse due to disagreements over detailed price adjustments. Although the formal supply contract signing is delayed beyond expectations, the goal is to finalize it within this year. The company plans to produce the supply volume in advance.

The main products under negotiation are the height-expandable cages with lateral approach (Expandable Lateral Lumbar Interbody Fusion Cage) and height-expandable cages with anterolateral approach (Expandable ATP Lumbar Interbody Fusion Cage), which are unrelated to the provisional injunction case.

L&K Biomed has signed a supply contract with the U.S. Department of Veterans Affairs (U.S. DEPARTMENT OF VETERANS AFFAIR) affiliated VA medical centers. VA medical centers are hospitals used by military personnel or their families, with 152 hospitals nationwide in the U.S. The related outpatient clinics number about 1,400. Since more than 40 million people are eligible to use VA medical centers, it represents a significant medical device consumption market within the U.S.

The supply unit price is high, making it a coveted target for U.S. medical device companies. Military hospitals and VA medical centers have high entry barriers, so only a few medical device companies supply to them.

A company official explained, "We will officially supply not only various product lines necessary for disc surgery at military hospitals and VA medical centers but also height-expandable cages with lateral approach and anterolateral approach."

He added, "We will conduct marketing targeting military hospitals and VA medical centers," and "Considering export unit prices and volumes, we expect sales and operating profits to increase significantly in the second half of this year."