SINGAPORE (Mar 12): Q&M Dental Group is in talks with two China-based companies over a joint venture to manufacture surgical masks.

This is in order to reduce the company’s reliance on external manufacturers and suppliers of surgical masks and to safeguard the company against future supply shocks, Q&M said in a regulatory filing late on March 11.

The outbreak of the novel coronavirus (Covid-19) has led to a surge in prices for surgical masks, on the back of a worldwide shortage in supply.

While the group said it has so far managed to maintain a healthy stockpile of surgical masks for its staff and employees, it added that the shortage has “adversely affected” medical and healthcare institutions.

The group announced Wednesday it has entered into a non-binding memorandum of understanding (MOU) with Hubei Aishubao Living Supplies Co and Guangzhou Pharmasen Co.

Aishubao produces and sells Class 1 medical devices in China, while Pharmasen is involved in the wholesale and distribution of medical equipment there.

Q&M did not specify where the activities of the proposed joint venture company are expected to be based. The total expected investment amount was also not disclosed.

Under the terms of the MOU, Q&M will contribute 20% of the total registered share capital of the joint venture company, with Aishubao and Pharmasen contributing 70% and 10% respectively.

The group added that the actual terms of the proposed investment and the respective investment amounts will be negotiated and agreed upon at a later stage in the discussions.

As at 11.28am, shares in Q&M are trading 6.5% lower, or down 3 cents, at 43 cents.