Mallinckrodt, the Pharmaceuticals business of
), recently completed the acquisition of CNS Therapeutics, Inc., a
St. Paul Minnesota-based specialty pharmaceutical company, for
roughly $100 million. The acquisition was closed quicker
-than-expected as the company had earlier anticipated that the
transaction would be closed in the fourth quarter of calendar year
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 ("Food and Drug Administration") and is
used to treat severe spasticity. Moreover, CNS Therapeutics is
currently developing a number of pain and spasticity products to
Acquisition to Expand
Specialty Pharmaceuticals Offerings
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 product
pipeline should boost Mallinckrodt's pain management branded
product portfolio. However, Covidien does not expect the deal to be
materially accretive to its fiscal 2013 sales and earnings.
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.
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 mid-2013.
Covidien was on an acquisition-spree in the recent past and
scooped up several new companies for diversification and
development of new products/technologies. The company acquired
BARRX, superDimension, PolyTouch, Newport Medical and Oridion,
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.
With market capitalization of $28.52 billion, 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
CR Bard Inc.
) among others.
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).
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