), a global leader in medical devices used in critical care and
surgery, was awarded a group purchasing agreement for its portfolio
of respiratory products with Premier healthcare alliance. The
multi-source agreement is effective from November 2012 and is
binding through three years until October 31, 2015.
This group purchasing agreement will pool buyers for Teleflex as
the company will gain access to Premier's alliance of 2,600
hospitals as well as more than 86,000 healthcare sites. According
to Teleflex, the agreement will enhance its supply chain as Premier
has liaisons with roughly 40% of hospitals and healthcare systems
in the U.S. while improving quality of care and clinical
Product categories included in the group purchasing agreement
are the well regarded Hudson RCI, Gibeck, Rusch, ConchaTherm brands
and other offerings providing aerosol therapy, medication delivery,
oxygen therapy and ventilation management along with clinical
Per the agreement, Teleflex's respiratory products will be made
available to buyers at exclusive member rates. Thus, the agreement
will also decrease the overhead costs for prospective buyers.
However, Teleflex may be unable to wend increasing costs owing
to higher input prices to the vendors under the group purchasing
agreement. The company is already facing rebate in output prices in
certain European nations due to introduction of group purchasing
Limerick, Pennsylvania-based Teleflex might achieve supply
continuum and gain competitive advantage, helped by the group
purchasing agreement. Its move to divest OEM Orthopedic division
along with its objective of portfolio expansion should help improve
its financial performance in the long run.
The proceeds from the sale of the OEM Orthopedic business,
coupled with Teleflex's ability to generate sufficient cash flow
from operations will allow it to exploit growth opportunities.
) which operate in similar business segments present a tough
competitive landscape for Teleflex. The demand for its products is
susceptible to healthcare reimbursement systems in the domestic as
well as the international market. Additionally, the company
operates in a stringent regulatory environment.
Teleflex currently retains a Zacks #4 Rank, which translates
into a short-term Sell rating.
BARD C R INC (BCR): Free Stock Analysis Report
CAREFUSION CORP (CFN): Free Stock Analysis
COVIDIEN PLC (COV): Free Stock Analysis Report
TELEFLEX INC (TFX): Free Stock Analysis Report
To read this article on Zacks.com click here.