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BD Medical, a unit of Becton, Dickinson and Company (BDX - Analyst Report), recently announced the U.S. launch of its BD Ultra-Fine Nano Pen Needle with PentaPoint Comfort. This new product will enhance the portfolio of BD Diabetes Care products under BD Medical.

The company believes that the launch of the Nano needle with PentaPoint will promote treatment progression and adherence of diabetes patients to insulin injections. Given the finding that 47% of diabetics in the U.S. are likely to improve their insulin administration if an injection could lessen affliction and discomfort, Becton’s latest offering presents a considerable market opportunity.

Revenues from BD Medical edged up 5.6% year over year to $4,007.3 million in fiscal 2011, driven by healthy revenues from Diabetes Care and Pharmaceutical Systems. Within BD Medical, Diabetes Care sales moved up 3.5% to $866.5 million, helped by global sales of pen needles.

Sales of new products accounted for 8% of total revenues in fiscal 2011. Given the company’s flourishing pipeline and its undertaking to commercialize innovative products in the near-term, new products are expected to provide incremental revenues.

Pursuing the studies which suggest that about one-fifth to one-third of diabetic patients are prone to needle anxiety and tend to avoid regular insulin injection, Becton designed its Penta needle tip to reduce the pressure required for skin permeation by 23%. This reflects advancement over existing 3-bevel pen needles.

The Ultra-Fine Nano Pen Needle with PentaPoint are expected to address the needs of diabetic patients who are reluctant to administer their injections regularly due to needle anxiety. The company’s newest offering is expected to improve injection experience for the burgeoning diabetic population in the U.S.

While we derive comfort from Becton’s focus on aggressive portfolio extension, we remain cautious due to lack of any major short-term catalyst. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company’s past growth, which is not expected to continue, given that the U.S. market is already largely penetrated.

On the positive side, Becton’s preeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field. However, the company faces a wide range of competitors, including Baxter International (BAX - Analyst Report) in certain niches, in each of its three business segments.

We currently have a long-term “Neutral” recommendation on Becton. The stock currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.

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