Large-cap medical technologies company,
) has successfully completed the acquisition of Fremont,
California-based medical device company, CV Ingenuity. Both the
parties have not disclosed financial details of the deal. The
closure of the deal, in the first quarter of 2013, was in line
with the company's expectations.
Privately-held CV Ingenuity specializes in the production of
devices used for the treatment of peripheral arterial disease
(PAD). Its product offerings are utilized to heal natural
vessels, clear vascular blockages and prevent restenosis. The
company's key product, a Drug Coated Balloon (DCB) platform with
a unique tunable rapid-release system, is still in the
Covidien integrated the acquired entity in its Vascular
business, under the core Medical Device segment. The inclusion of
CV Ingenuity's strong product portfolio should boost Covidien's
vascular product offerings and reinforce its leading position in
providing innovative vascular solutions.
The company plans to invest in research and development
(R&D) to develop CV Ingenuity's product portfolio. Management
is hopeful that the company will receive U.S. Food and Drug
Administration (FDA) approval for a DCB product by fiscal 2017
using the CV Ingenuity technology.
Covidien expects R&D expenses to increase more than $20
million in the second half of fiscal 2013 and above $30 million
in fiscal 2014. However, despite these higher R&D expenses
and acquisition-related costs, the company reiterated its fiscal
2013 guidance. Management forecasts adjusted operating margin in
the range of 22%-23% for fiscal 2013.
Earlier, in October 2012, Covidien's Pharmaceuticals business,
Mallinckrodt, acquired CNS Therapeutics Inc., a St. Paul
Minnesota-based specialty pharmaceutical company, for roughly
$100 million. Covidien plans to spin-off its Pharmaceutical
business by mid-2013 to focus on its high-margin surgical
Covidien is a leading developer, manufacturer and distributor
of medical devices and services on a global scale. However, the
company's product offerings under its larger Medical Device
segment are similar to some of its competitors like
Johnson & Johnson
Becton, Dickinson and Company
CR Bard Inc.
Covidien currently carries a Zacks Rank #3 (Hold). We have a
Neutral recommendation on the stock for the long term.
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