OMEGA Diagnostics has seen its shares soar 12% after it received around £360,000 of grant funding to help set up a manufacturing facility in India for its highly anticipated HIV testing kit.
The company said the move would help to avoid a 30% import charge if it had exported the Visitect CD4 test from the UK as well as providing a secondary supply base.
However it reiterated its commitment to manufacturing at its headquarters in Alva, Clackmannanshire, and said plans to effectively double job numbers there to more than 60 in the coming years were unaffected.
Andrew Shepherd, chief executive, said: "India is one of the largest HIV markets in the world, along with South Africa and Nigeria, so it is already a very big potential market for the CD4 test.
"There is a nearly 30% import duty going into India. It is a big problem in adding on the cost in India. If you manufacture the particular product in India you get past that 30% duty and the cost is still economical."
The grant funding is part of around £ 1 million the Australian based Burnet Institute, which developed the initial research on which the CD4 test is based, has received from non-governmental healthcare access campaign group Unitaid.
The money not being used in setting up the new manufacturing site is being put towards major field testing of CD4 in South Africa and India from July this year. CD4 works by using a small amount of blood from a finger prick to determine whether a patient's white blood cell count has fallen to a level where retroviral drug treatment is needed.
The results are available after 40 minutes with no need for expensive laboratory work.
Unitaid, which provides funding to tackle inefficiencies in emerging countries for medicines, diagnostics and prevention of diseases such as HIV, malaria and tuberculosis, said the projected $5 cost of CD4 was significantly less than existing tests.
Mr Shepherd said the first batch of field tests, which start next month in Kenya and Mozambique, would involve hundreds of CD4 kits while the larger studies would run into thousands.
Omega finance director Kieron Harbinson confirmed Alva was already set-up to manufacture around seven million CD4 tests each year. As yet Omega has not secured premises or bought equipment in India, with Mr Harbinson suggesting it would be at least another 12 months before the facility there would be online.
He said: "There is no change to the expansion plan for Alva. If needed with further investment then we could scale up beyond seven million.
"What we are doing is making sure that if the demand for CD4 goes as well as we hope then, by having a second facility, it increases the security of supply."
Omega also confirmed it was making progress on providing 40 allergen testing products for the IDS-iSYS system, which is used in laboratories around the world.
It said seven had reached the stage of being ready to go to market.
A further 11 are going through testing to prove the claims made by Omega can be verified while 11 more are still being optimised.
Mr Harbinson said: "The fact we have got this first group of seven demonstrates we can take what was initially a concept and take it through feasibility, optimisation and end up with a product that is comparable to the current market leader.
"The remaining length of time to get to a launch panel of 40 is pretty dependent on how long it takes remaining allergens to undergo optimisation which is a moveable feast.
"For that reason is we are currently revising our timetable without putting a finite time on when we will launch the 40."
A final group of 11 allergens is close to being selected with Omega stating the overall progress gave it "increased confidence in achieving full-scale commercialisation".
Mr Harbinson said Omega was planning to bring some work on the allergy programme back in-house soon, which would contribute to jobs growth at Alva.
Keith Redpath, analyst at FinnCap, raised its price target on Omega shares to 35p.
He said: "In the allergy automation development programme seven allergens have now successfully completed claims support work, however the project is behind schedule and we anticipate an update on the timetable after the end of the financial year [in March]."
Shares in Omega closed up 3.38p to 30.5p.