In a bid to expand into faster growing markets, medical
CR Bard Inc.
) has agreed to purchase leading maker of silicone urinary
incontinence and urine drainage products,
) for roughly $262 million or $20 per share. The deal has been
formed as a merger and is likely to close by year-end.
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According to BJU International, an estimated 1.1 billion people
across the globe are likely to ail from complications of the
lower urinary tract or obstructions in the bladder outlet by
2018. These individuals suffer from chronic conditions like
urinary retention and incontinence, which require product
solutions in the home setting.
Rochester's innovative offerings are sold in the $930 million
global urology homecare market. Its Magic 3 intermittent self
catheters (ISC) are garnering significant share in the $800
million global ISC market. Moreover, it holds a market leading
position in the $130 million global male external catheters
(MECs) market with its line of incontinence pads and MECs to
treat male urinary incontinence.
We believe that the acquisition of Rochester Medical complements
BCR's strategy to streamline its underlying business and gain
access into high-growth markets with significant returns. We note
that Rochester's product portfolio is growing at a double-digit
rate, specially the intermittent self-catheter business. Overall,
the buyout has bolstered CR Bard's position in the niche urology
home care market.
In late August, the company also agreed to acquire leading
developer and supplier of plant based hemostatic agents Medafor,
Inc. to boost its surgical specialties portfolio (particularly
surgical hemostats). Currently, the global market for surgical
hemostats is over $1.4 billion.
BCR has a Zacks Rank #3 (Hold). Although delayed, potential
benefit from the Gore litigation along with expansion into
emerging markets and aggressive investments in R&D for
new-product development should enable the company to drive growth
in the long term.
However, the challenging Medtech and a less flexible pricing
environments may pressurize prices across the board. In addition,
the company continues to face procedure volume headwind and
competitive pressure in the end markets. Legal issues regarding
product quality also remain an area of concern.
Other medical stocks that warrant a look include
STRAUMANN HLD N AKT
), carrying a Zacks Rank #1 (Strong Buy), and
The Cooper Companies
), carrying a Zacks Rank #2 (Buy).