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International healthcare major, Covidien plc (COV - Analyst Report) has inked an agreement with leading pulmonary imaging software service provider, VIDA Diagnostics. As per the agreement, Covidien will sell VIDA’s market-leading Apollo imaging software technology along with its i-Logic lung navigation system to advance minimally invasive treatment of lung diseases.

The i-Logic system has been developed by superDimension, which Covidien acquired in May 2012 to boost its Medical Devices segment’s product portfolio. The device is used in the treatment of lung cancer, chronic obstructive pulmonary disease (COPD), asthma and other lung disease.

According to the American Lung Association, about 370,000 people suffer from lung cancer with an annual expense of $14 billion. COPD (third leading cause of death in the U.S.) and asthma add $18 billion and $56 billion, respectively, to annual healthcare expenses in the U.S.

Covidien is a leading global health care products company with a history of developing high-quality products in a cost-effective manner. The collaboration with VIDA has rendered its offerings for lung treatment advantageously, as it has provided doctors with more treatment options. Its minimally invasive i-Logic system can gain access to areas of the lungs unattainable by traditional bronchoscopy. Along with the Apollo technology, which provides accurate imaging information, the combined technologies enable physicians to deliver enhanced lung treatment.

Covidien remains committed to rolling out new products and technologies, focusing on emerging markets, and boosting market share in core segments through acquisitions. It is also enhancing shareholders’ value through dividends and share repurchases, leveraging healthy free cash flow and strong earnings power.

However, Covidien faces stiff competition and remains exposed to pricing and utilization headwinds, along with acquisition/divestment risks. We also remain concerned about the tepid European economy. In addition, foreign exchange translation is expected to dampen growth.

Covidien currently carries a Zacks Rank #3 (Hold). Other companies like NuVasive (NUVA - Snapshot Report), Exactech (EXAC - Snapshot Report) and Perrigo (PRGO - Analyst Report) are expected to do well in the medical industry. While NuVasive carries a Zacks Rank #1 (Strong Buy), the other two are Zacks Rank #2 (Buy) stocks.

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