), a global leader in medical devices used in critical care and
surgery, was awarded two new three-year group purchasing
agreements with Premier healthcare alliance for its portfolio of
endotracheal tubes. The agreements are effective from January 1,
2013 and are binding through December 31, 2015.
Product categories included in the group purchasing agreement are
the well-regarded Rusch and Sheridan endotracheal tubes,
including the ISIS HVT endotracheal tubes and related products.
Teleflex already has a group purchasing agreement for its
portfolio of respiratory products with Premier which is effective
from November 2012 and is binding through three years.
The group purchasing agreements will pool buyers for Teleflex as
the company will gain access to Premier's alliance of 2,700
hospitals. Per the agreements, Teleflex's offerings will be made
available to buyers at exclusive member rates. As a result, the
group purchasing agreements are expected to decrease the overhead
costs for prospective buyers.
The group purchasing agreements will allow Limerick,
Pennsylvania-based Teleflex to achieve supply continuum and
improve sales volume. The company's focus on profitable and
consistent growth is expected to yield results, helped by
demographic trends and barriers to entry in the industry.
The recent divestiture of its OEM Orthopedic division is
expected to aid the company's strategy of new product
introduction and investment in innovative technologies. This will
accelerate Teleflex's top-line in the years ahead.
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However, Teleflex may be unable to wend increasing costs owing to
higher input prices to the vendors under the group purchasing
agreements. The company is already facing rebate in output price
in certain European nations due to introduction of group
Additionally, larger players like
), which operate in similar business segments, present a tough
competitive landscape for Teleflex. The demand for Teleflex's
offerings is heavily influenced by healthcare reimbursement
systems in the domestic as well as the international market.
We currently have a long-term Neutral recommendation on Teleflex.
The stock currently carries a Zacks #2 Rank, which translates
into a short-term Buy rating.