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Covidien Unveils New Training Center

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In order to expand its business in the emerging markets, medical device maker Covidien plc launched its first training and education center in India – The Covidien Center of Innovation India (CCI India). The center will offer training on advanced procedures and techniques to clinicians using leading equipment and technology. Since the announcement, the company’s share price rose 1.3% after the market closed yesterday.

CCI India is the third training center of COV in an emerging market, with two other centers located in Shanghai, China and Osong, South Korea. Covidien has plans to open additional centers in Istanbul, Turkey and São Paulo, Brazil in this year.

The Indian center is competent enough to train more than 5,000 healthcare professionals annually, both from within the country and those coming in from the neighboring countries.

CCI India boasts of unique features like a surgical lab with seven fully-equipped operating stations, combined with a simulation lab for clinical scenario training and a human patient simulator. Additionally, a well-stocked library, providing medical professionals with access to the latest medical journals, complete with four workstations is also part of the centre. The training center also has an inbuilt auditorium with seating capacity for 60 people, and equipped with a multimedia system to make training sessions more effective and appealing.

The primary objective of CCI India is to increase awareness about the spread of chronic diseases and expose medical professionals to Covidien’s devices adapted to the treatment of such diseases. Treatment procedures include those that address vascular diseases, metabolic disorders (obesity and Type II diabetes) and cancer.

This special focus on chronic diseases is justified. The World Health Organization (WHO) in 2004 projected that more than 60 million people are likely to die due to chronic diseases across India in the next 10 years. Deaths from chronic ailments, especially diabetes, are estimated to increase by 35%. Moreover, cardiovascular diseases, dyslipidemia and varied types of cancers are widespread in the urban and rural areas, still inadequately diagnosed and largely untreated.

Though the U.S and European markets are showing signs of improvement, Covidien is continuously undertaking investments in the emerging markets, with recent ones being made in China and Brazil. COV recently announced double-digit growth in Brazil, Russia, India, China (BRIC) countries, in spite of changes in the reimbursement system and difficult comparisons in Russia.

We believe unique and innovative initiatives such as the one in India will enable Covidien to gain a better foothold in the emerging markets. Major healthcare devices companies are competing against each other to tap the growing opportunities in the emerging markets of China, Brazil and India.

Recently, COV announced its first-quarter fiscal 2014 adjusted earnings per share from continuing operations of $1.00, up 3.09% y/y. Earnings per share were 6 cents ahead of the Zacks Consensus Estimate in the quarter. Total revenues in the quarter grew 2.80% (up 5% in constant currency) to $2,639 million, exceeding the Zacks Consensus Estimate by 1.4%.

Currently, COV carries a Zacks Rank #2 (Buy). Investors interested in the medical industry can also consider stocks like NuVasive, Inc. (NUVA - Free Report) carrying a Zacks Rank #1 (Strong Buy), and Quidel Corp. (QDEL - Free Report) and Mead Johnson Nutrition Co. , both carrying a Zacks Rank #2 (Buy).

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