Covidien Buys Xanodyne's Drug - Analyst Blog

By Zacks Equity Research,

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Recently, Mallinckrodt, the Pharmaceuticals business of Covidien plc ( COV ), revealed that it has inked an agreement with Xanodyne Pharmaceuticals, an integrated specialty pharmaceutical company with expertise in pain management.

Per the agreement, Mallinckrodt bought Xanodyne's Roxicodone's (oxycodone hydrochloride tablets USP) in 5, 15 and 30 mg dosage strengths and acquired all rights to the Roxicodone New Drug Application (NDA). Roxicodone is approved for moderate to severe pain management and is used where the application of an opioid analgesic is necessary. The drug is currently available in the U.S. The companies did not provide any financial details.

The inclusion of Roxicodone has enhanced Mallinckrodt's pain management product portfolio. 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 ranks in the top 10 of prescription-based pharmaceutical manufacturers in the U.S. Exalgo and Pennsaid are its front-line branded products, which are successfully contributing to the company's sales.

In the last reported quarter, 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 looking to spin-off Mallinckrodt into a stand-alone company by mid-2013.

Recently, Covidien extended its support for the Sentinel Event Alert issued by The Joint Commission regarding Safe Use of Opioids in Hospitals. This particular issue provided a number of suggestions that can be taken to avoid the risks associated with opioid use among hospital in-patients. Covidien supported this initiative to encourage safe and effective use of pain management drugs.

Covidien is a leading global health care products company with a rich history of developing high-quality products in a cost-effective manner. It competes with Johnson & Johnson ( JNJ ), Becton Dickinson ( BDX ) and C.R. Bard ( BCR ), among others. The company plans to bolster its sales with the help of strategic acquisitions.

Covidien remains committed to rolling out new products and technologies, focusing on emerging markets, and boosting market share in core segments through investments in its sales and marketing infrastructure.

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 #4 Rank (Sell).

COVIDIEN PLC (COV): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: COV

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