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International medical technology major Covidien plc. (
- Analyst Report
unveiled some of its newly developed surgical offerings at the ongoing American College of Surgeons (“ACS”) annual clinical congress. This event began in Chicago on September 30 and will continue through tomorrow, October 4.
Among the various products that are being displayed at the event, the two most innovative devices are the Sonicision device and the iDrive Ultra powered stapling system. These devices are expected to garner attractive revenue opportunity for the company in the near-term.
The Sonicision product from Covidien’s Energy Devices business is medical industry’s first cordless ultrasonic dissection device. The product is designed for soft-tissue incision and hemostasis for a wide range of surgical procedures, including colorectal, bariatric, urological, gynecological and general surgeries. One of the unique features of Sonicision is that it can be smoothly moved and positioned in limited operating space, thereby enhancing surgical precision and efficacy, resulting in better patient safety.
The iDrive Ultra system is one of the latest offerings from Covidien’s Endomechanical Instruments under the Medical Devices business. The iDrive Ultra system is the first stapler compatible with Covidien’s entire range of Endo GIA reloads with Tri-Staple technology. It received U.S. Food and Drug Administration (FDA) approval in August 2012. With advanced features and extensive articulations, the system can be easily maneuvered without the application of manual firing force.
Other products that were showcased at the event include the Barrx ablation technology, AccuMesh positioning system, Endo GIA radial reload with Tri-Staple technology, Parietex composite ventral patch, ProGrip laparoscopic self-fixating mesh, V-Loc wound closure reload for use with EndoStitch and SILS stitch suturing devices, and the LigaSure 5 mm blunt tip portfolio.
Covidien aims to spend 5% to 6% of its adjusted revenues on research and development over the next few years. The company plans to introduce 7 soft tissue repair products, 2 endomechanical products, 2 energy devices, 10 peripheral vascular products and 5 neurovascular products in 2013. In all, there are 36 products in the company’s pipeline.
Covidien remains committed to rolling out new products and technologies, focusing on emerging markets, and boosting market share in core segments through investments in sales and marketing infrastructure. Recently, at the Cardiovascular and Interventional Radiological Society of Europe (“CIRSE 2012”) Annual Congress, the company introduced the Viance Crossing Catheter and Enteer Re-entry System vascular products in the U.S., the European Union and certain selected international markets.
For fiscal 2012, Covidien envisages net revenues to grow by 3% to 5% year over year. Based on the uniqueness of these new products, we expect the company should be able to either meet or surpass its expectations.
With market capitalization of $28.52 billion, Covidien is a leading global health care products company with a rich history of developing high-quality products in a cost-effective manner. Management expects that focus on product innovation; aggressive portfolio management and optimal spending on future investments will yield positive results in the long run.
However, sustained pricing/procedure volume pressure, fluctuating foreign exchange rates, a sluggish U.S. and European economy represent major headwinds. It also faces stiff competition from companies like Becton Dickinson ( BDX - Analyst Report ) and C.R. Bard ( BCR - Analyst Report ) . We currently have a Neutral recommendation on Covidien, which carries a short-term Zacks #3 Rank (Hold rating).
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