Health care major
Covidien
(
COV
) has completed its takeover of California-based privately held
BARRX Medical for roughly $325 million. The Ireland-based company
forged a definitive deal to acquire all the outstanding shares of
BARRX Medical in November 2011. The agreement also calls for future
milestone payments.
BARRX Medical makes devices (ablation catheters/systems) for
treating gastrointestinal diseases and Barrett's esophagus
syndrome, a pre-cancerous condition of the lining of the esophagus
(tube which carries food from the throat to the stomach).
Barrett's esophagus syndrome affects about 1% of American
adults, generally with gastroesophageal reflux disease ("GERD"). If
not treated, the condition can lead to esophageal adenocarcinoma,
which is associated with a five-year survival rate of below
15%.
BARRX's devices (marketed under the HALO moniker), which use
bipolar radiofrequency waves, provide a uniform and controlled
ablation that removes the diseased tissue and stimulates re-growth
of normal cells.
The acquisition reinforces Covidien's presence in
gastrointestinal diseases therapy space. It complements the
company's energy-based product portfolio and is in tandem with its
strategy to invest in products that can offer global competitive
advantage.
With the deal closure, BARRX Medical will now become a part of
Covidien's Energy product line in its larger Medical Devices
division. The transaction is not expected to have a material impact
on the company's sales, operating margin and earnings in fiscal
2012.
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.
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. Moreover, the company is expanding its portfolio
through acquisitions and strategic collaborations.
However, Covidien faces intense comp etition, reimbursement
uncertainty and sustained pricing and procedure volume pressure. We
are currently Neutral on the stock, backed by a short-term Zacks #3
Rank (Hold).
BARD C R INC (
BCR
): Free Stock Analysis Report
BECTON DICKINSO (
BDX
): Free Stock Analysis Report
COVIDIEN PLC (
COV
): Free Stock Analysis Report
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
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