* EU member states back non-renewal of Selektope approval
* Limited impact on near-term financials; EU ~4% of sales
* Still positive on long-term prospects, but spill-over risk remains
The decision and next steps
I-Tech announced this afternoon that EU member states have voted for the European Commission’s proposal not to renew the approval of medetomidine (Selektope) under the Biocidal Products Regulation. The non-renewal takes effect once the formal decision-making process is complete, followed by an expected 180-day transition during which Selektope coatings can still be supplied and applied in the EU. Vessels already coated are unaffected and can keep calling at EU ports. I-Tech disputes parts of the assessment, including the endocrine-disruption classification, and plans to challenge it through scientific, regulatory and legal channels.
Limited impact on near-term financials
The EU accounts for ~4% of I-Tech's sales, and according to the company, ~95% of the global commercial fleet can continue to use Selektope. The direct effect on financials is therefore relatively minor.
Remain positive on long-term prospects
Given the small EU exposure, we remain positive on I-Tech’s long-term outlook. However, there is a risk that the decision could weigh on I-Tech’s efforts to enter new markets, such as the US (albeit a small market), or on re-approval processes in regions where Selektope is already approved (most importantly Japan, South Korea and China). Paint companies could also become more hesitant to use Selektope in other markets.