Recently, Mallinckrodt, the Pharmaceuticals business of
), announced a definitive deal to acquire St. Paul Minnesota-based
specialty pharmaceutical company, CNS Therapeutics, Inc. for
roughly $100 million. The acquisition is expected to close by the
end of 2012, subject to certain terms and conditions.
Privately-owned CNS Therapeutics develops and markets products
specifically intended for site-specific delivery to the central
nervous system to treat intractable chronic pain and neurological
disorders. The company's key product line viz. Gablogen (baclofen
injection) is FDA-approved and is used to treat severe spasticity.
Moreover, CNS is currently developing a number of pain and
spasticity products to leverage growth.
Acquisition to Boost Specialty Pharmaceuticals
Covidien plans to integrate the CNS Therapeutic business with its
Specialty Pharmaceuticals division, within the Pharmaceutical
business, to capitalize on its therapeutic expertise. The inclusion
of CNS Therapeutic's marketed product along with its solid pipeline
should boost Mallinckrodt's pain management branded product
However, Covidien does not expect the deal to be materially
accretive to its fiscal 2013 sales and earnings, assuming that the
transaction would be completed in the fourth quarter of calendar
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Mallinckrodt is a leading manufacturer of bulk acetaminophen in the
world and the largest supplier of opioid pain management drugs in
the U.S. It also features in the top 10 list of prescription-based
pharmaceuticals manufacturers in the U.S. Covidien is looking to
divest Mallinckrodt and convert it into a stand-alone company by
In the last reported third quarter of fiscal 2012, revenues from
Covidien's Pharma segment remained flat year over year at $501
million. Robust gains in the Specialty Pharmaceuticals business
were offset by lower Contrast Product sales. Specialty
Pharmaceuticals sales surged 21% to $145 million spurred by solid
revenue from the Exalgo and Pennsaid products.
Covidien is a leading developer, manufacturer and distributor of
medical devices and services on a global scale. Its business
segments overlap with the business of its competitors such as
Becton, Dickinson and Company
Johnson and Johnson
CR Bard Inc.
) among others.
Covidien remains committed to rolling out new products and
technologies, focusing on emerging markets, and boosting market
share in core segments through investments in sales and marketing
infrastructure. Management expects that a focus on product
innovation, aggressive portfolio management and optimal spending on
future investments will yield positive results in the long run.
However, sustained pricing/procedure volume pressure, fluctuating
foreign exchange rates, a sluggish U.S. and European economy
represent major headwinds. We currently have a Neutral
recommendation on Covidien, which carries a short-term Zacks #3
Rank (Hold rating).