Netherlands-based Conceptus BV, the newly formed wholly-owned subsidiary of Conceptus Inc. , recently acquired certain assets and all distribution rights of the Essure device from the company’s Dutch distributor for approximately $3.6 million. Conceptus BV’s operating results will be included in the company's financial results beginning in the fourth quarter of fiscal 2011.
With respect to unit sales, Netherlands is Conceptus' third largest market in Europe. The company with the formation of Conceptus BV aims to solely concentrate on the sales and customer support of the Essure device in this region and expects the acquisition to generate incremental revenues and be accretive in fiscal 2012.
With a favorable reimbursement environment, Conceptus targets to achieve a standard of care in the Dutch permanent birth control market within the next two years. The company expects this endorsement to further boost the sale of the company’s non-surgical permanent birth control procedure, Essure.
The company derives a major share of its revenues from Essure. However, during the second quarter of fiscal 2011, domestic sales of Essure slipped 11.4% year over year to $24.8 million impacted by lower patient visits to OB/GYN offices and ongoing competitive product trialing.
The company in a bid to retrieve the situation is expanding its sales coverage and gradually witnessing success in reducing the impact of competition, particularly from physicians’ trialing other competing products. In September, the US Food and Drug Administration (FDA) approved the removal of nickel hypersensitivity contraindication from the Essure procedure Instructions for Use (IFU), which will further help Conceptus to gain traction in its domestic business.
Moreover, sales of the Essure system also depend on the number of physicians trained to perform the procedure. Conceptus is striving toward enhancing the availability of the system worldwide by raising consumer and physician awareness as well as imparting training to physicians on performing the procedure.
During the recently reported quarter, the company expanded its physician penetration by enrolling 538 new physicians into preceptorship, certifying approximately 290 physicians and transitioning approximately 110 physicians to performing procedures in the office setting. Till date, around 13,553 physicians are fully equipped to perform the Essure procedure.
Conceptus retains a Zacks #3 Rank (Hold) short term that corresponds with our Neutral long-term recommendation on the stock. The company faces tough competition from Hologic (HOLX - Analyst Report), which is a Zacks #4 Ranked (Sell) peer with a Neutral recommendation.