CareFusion Corporation ( CFN ) has announced an eight-year agreement with Terumo Corporation to co-brand, market and distribute the latter's SurFlash line of safety peripheral IV catheters across the U.S. However, the financial terms of the deal have not been disclosed.
The announcement triggered a 1.9% rise in CareFusion's share price in the trading session.
The exclusive products of Terumo, namely SurFlash and SurFlash Plus Safety IV Catheters, are part of this new contract. Terumo's deal entails CareFusion to concentrate only in the U.S. acute care hospital market. Per the agreement, CareFusion will initiate commercialization of the products from the current month itself.
The SurFlash and SurFlash Plus Safety IV line of Catheters have been integrated with a passive safety technology to minimize the risk of needle stick injuries as well as exposure to blood borne pathogens. These products are equipped with the unique double-flash SurFlash feature which provides a visual confirmation when both the needle and catheter enter a vessel, thus, in turn, reducing risks of failed attempts.
Additionally, the SurFlash Plus Safety IV Catheter contains a blood control safety valve which is meant to reduce the risk of blood exposure between the removal of the needle and the attachment of the IV set.
The above-mentioned products enhance results on catheter placement by more than 20% in the first attempt itself. Higher first-placement success rates induce better patient experience, minimize wasted catheters and save clinicians' time, thus increasing cost-effectiveness for hospitals.
A chance to distribute and market such technologically advanced products of Terumo increases CareFusion's scope to widen exposure for its range of products across the U.S. Further, CareFusion also gains the opportunity to augment its vascular access portfolio business.
Clinically differentiated products like those under the SurFlash line have strong potential to occupy a leadership position in vascular procedures.
Terumo has chosen CareFusion as the expertise of the latter in the acute care infusion market should aid growth of these safety products in the U.S.
Revenues from CareFusion's Procedural Solutions business rose 7% in the first quarter of fiscal 2014 (ended Sep 30, 2013). The recent deal with Japanese medical technology company is likely to further growth prospects of the business and help CareFusion drive more revenues from the business.
For the fiscal year ending June 30, 2014, CareFusion continues to expect organic revenues to rise 1% to 4% on a constant currency basis compared with fiscal 2013 revenues of $3.55 billion. Adjusted earnings per share from continuing operations are expected to be in the range of $2.30 to $2.40, respectively.
Currently, CareFusion carries a Zacks Rank #3 (Hold).
Investors interested in the medical products industry can also consider stocks like NuVasive, Inc. ( NUVA ) carrying a Zacks Rank #1(Strong Buy), and Quidel Corp . ( QDEL ) and Mead Johnson Nutrition Co. ( MJN ), both carrying a Zacks Rank #2 (Buy).
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