Global sanitation products major, Ecolab Inc. (ECL) recently collaborated with World Health Organization (“WHO”) to raise the standard of hand hygiene in hospitals around the world to lower health care associated infections (“HAIs”).
Apart from Ecolab, WHO has teamed up with 14 other companies producing or distributing hand hygiene products to work together in three major areas: education, research and system change. Together, they are known as the WHO Private Organizations for Patient Safety. Their main goal is to promote and spread awareness regarding WHO recommended hand hygiene offerings and ensure their availability around the globe.
The World Health Organization has reported that 7% and 10% of patients admitted in hospitals in developed and developing countries, respectively, catch an infection during their stay. Also, as high as 30% of patients admitted in intensive care units can acquire infections due to poor hand hygiene.
According to another survey conducted across 2000 hospitals in 69 nations by the WHO, only 65% of them have achieved a good standard related to hand hygiene. The rest are below average and require better resources and awareness.
Thus, management at Ecolab’s Global Healthcare division believes that it has a lot of scope to work in collaboration with its partners and enhance patient safety around the world. The health care business offers infection prevention products such as hand hygiene products, instrument cleaners, patient drapes, equipment drapes and surgical fluid to various surgery centers, acute care hospitals, dental and veterinary clinics.
Revenues from Ecolab’s larger U.S. Cleaning & Sanitizing segment climbed 4% year over year to $709 million in the first quarter of 2012,. Within U.S. Cleaning & Sanitizing, the Healthcare unit revenues grew 24% year over year led by higher environmental hygiene, surgical drapes and hand hygiene sales.
Ecolab remains focused on bringing new technologies aimed at reducing food safety risks. Moreover, the company is aggressively pursuing acquisitions to expand into emerging markets. Latin America remains a key growth engine for the company’s overseas operations.
Although we are impressed by Ecolab’s strong international exposure, we remain cautious about aggressive competition from the likes of Clorox (CLX) and Church & Dwight (CHD). Also, raw material price inflation and high delivered product costs remain headwinds. We are currently Neutral on Ecolab, supported by a short-term Zacks #3 Rank (Hold).
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