International medical technology major
) unveiled some of its newly developed surgical offerings at the
ongoing American College of Surgeons ("ACS") annual clinical
congress. This event began in Chicago on September 30 and will
continue through tomorrow, October 4.
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Among the various products that are being displayed at the event,
the two most innovative devices are the Sonicision device and the
iDrive Ultra powered stapling system. These devices are expected to
garner attractive revenue opportunity for the company in the
The Sonicision product from Covidien's Energy Devices business is
medical industry's first cordless ultrasonic dissection device. The
product is designed for soft-tissue incision and hemostasis for a
wide range of surgical procedures, including colorectal, bariatric,
urological, gynecological and general surgeries. One of the unique
features of Sonicision is that it can be smoothly moved and
positioned in limited operating space, thereby enhancing surgical
precision and efficacy, resulting in better patient safety.
The iDrive Ultra system is one of the latest offerings from
Covidien's Endomechanical Instruments under the Medical Devices
business. The iDrive Ultra system is the first stapler compatible
with Covidien's entire range of Endo GIA reloads with Tri-Staple
technology. It received U.S. Food and Drug Administration (FDA)
approval in August 2012. With advanced features and extensive
articulations, the system can be easily maneuvered without the
application of manual firing force.
Other products that were showcased at the event include the Barrx
ablation technology, AccuMesh positioning system, Endo GIA radial
reload with Tri-Staple technology, Parietex composite ventral
patch, ProGrip laparoscopic self-fixating mesh, V-Loc wound closure
reload for use with EndoStitch and SILS stitch suturing devices,
and the LigaSure 5 mm blunt tip portfolio.
Covidien aims to spend 5% to 6% of its adjusted revenues on
research and development over the next few years. The company plans
to introduce 7 soft tissue repair products, 2 endomechanical
products, 2 energy devices, 10 peripheral vascular products and 5
neurovascular products in 2013. In all, there are 36 products in
the company's pipeline.
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. Recently, at the Cardiovascular and Interventional
Radiological Society of Europe ("CIRSE 2012") Annual Congress, the
company introduced the Viance Crossing Catheter and Enteer Re-entry
System vascular products in the U.S., the European Union and
certain selected international markets.
For fiscal 2012, Covidien envisages net revenues to grow by 3% to
5% year over year. Based on the uniqueness of these new products,
we expect the company should be able to either meet or surpass its
With market capitalization of $28.52 billion, Covidien is a leading
global health care products company with a rich history of
developing high-quality products in a cost-effective manner.
Management expects that 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. It also faces stiff competition from
). We currently have a Neutral recommendation on Covidien, which
carries a short-term Zacks #3 Rank (Hold rating).