Leading healthcare products maker Covidien plc (COV) recently secured approval of the U.S. Food and Drug Administration’s (“FDA”) for its embolic protection device dubbed SpiderFX.
SpiderFX is indicated for treating severely calcified lesions during interventional procedures in arteries in the lower extremities. It is the only embolic protection device for this treatment in the U.S.
Embolic protection devices are geared to capture and remove embolic debris (such as a fragment of plaque) that becomes dislodged during an interventional procedure. Embolic debris are associated with risk of complications as they may clog smaller vessels, leading to poor patient outcomes. Such risk is higher in patients with complex conditions such as critical limb ischemia, single vessel run-off or complex lesions such as calcium or thrombus.
Covidien obtained SpiderFX through its $2.6 billion acquisition of endovascular devices makerev3 Inc in July 2010. The device has the broadest indication among distal embolic filters in the U.S. Besides lower extremities, it is also indicated for use in carotid arteries and coronary saphenous vein graft. SpiderFX has been marketed in Europe since 2005 and is indicated for use in lower extremities in most regions outside of the U.S.
Covidien filed the 510(k) to the FDA for SpiderFXbased on data from the DEFINITIVE Ca++ study. Results from this trial demonstrated that the device can be safely and effectively used with the company’s TurboHawk plaque excision device to treat patients with severely calcified superficial femoral artery and popliteal artery lesions.
Covidien boasts a well diversified product and technology portfolio. Its core medical devices business faces stiff competition from Johnson & Johnson (JNJ), Becton Dickinson (BDX) and C.R. Bard (BCR).
Covidien remains committed to rolling out new products and technologies, focusing on fast-growing markets, and boosting market share in core segments through investments in sales and marketing infrastructure. The acquisition of ev3 has pushed the company’s leadership up in the endovascular devices market giving it a strong foothold in both the peripheral vascular and neurovascular sub-segments.
Covidien is well placed to achieve its long-term revenue and earnings growth targets based on its attractive fundamentals, effective execution, new product cycle, synergies of acquisitions and expansion into emerging markets.
However, we are concerned about intense competition, reimbursement uncertainty and the sustained pricing and procedure volume pressure, which may weigh on the company’s Medical Devices business in fiscal 2012. Our Neutral recommendation on the stock is supported by a short-term Zacks #3 Rank (Hold).
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