Leading healthcare products maker
) recently announced the inauguration of its latest Research and
Development ("R&D") facility called the China Technology Center
("CTC") in Shanghai. The center aims to collaborate with local
medical practitioners to develop innovative medical devices to
cater to the Chinese as well as other emerging economies.
Covidien has successfully completed the project following its
earlier announcement in September 2011 to start operations in the
CTC by mid-2012. The setting up of the new R&D center in China
is in accordance with the company's global strategy to expand its
foothold in key emerging markets.
With an investment of $45 million over a span of 3 years, the
100,000-square-feet facility will house the Ireland-based company's
two emerging market R&D organizations, "Tailored Products" and
"Breakthrough Platforms." Tailored Products will identify and
develop products customized for China and other emerging markets,
while Breakthrough Platforms will create new medical device
technologies for Asian markets.
Covidien's other operations in China include 10 commercial
offices, a manufacturing center and The Covidien Clinical Institute
("CCI"), which imparts training to local healthcare professionals
regarding proper and effective use of latest medical devices.
The company is also engaged in various partnership programs with
some renowned academic institutions in China. Thus, the CTC will
become the focal point where medical experts, scientists,
students as well as world-class engineers will together
develop cutting-edge technologies to further advance the medical
device industry across developing nations.
The new R&D center in Shanghai is also in line with the
Chinese government's 12
Five-Year Plan to boost the nation's healthcare industry and
enhance patient outcome through innovation.
Covidien is a leading global health care products company with a
history of developing and manufacturing high-quality products in a
cost-effective manner. The company boasts of a well-diversified
product and technology portfolio. Covidien's larger Medical Device
unit overlaps with the business of its competitors like
Johnson & Johnson
Covidien is well placed to achieve its long-term revenue and
earnings growth targets based on its attractive fundamentals,
effective execution, new product cycle, synergies of acquisitions
and expansion into emerging markets.
However, sustained pricing/procedure volume pressure,
fluctuating foreign exchange rates, a sluggish U.S. and European
economy represents major headwinds. Our Neutral recommendation on
the stock carries a short-term Zacks #4 Rank (Sell).
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