Distributor of dental, veterinary, and rehabilitation supplies, Patterson Companies, Inc. (PDCO) has declared that it is taking necessary initiatives in order to prevent unsafe dental products from entering the market.
Patterson Companies will ensure that its dental products are directly obtained from the manufacturer and not through various supply channels. The main reason behind this drive is to obliterate the negative traits these channels usually exhibit.
Management is of the opinion that these channels generally carry heavily discounted gray market products, along with counterfeit or other black market products.
According to the U.S. Food and Drug Administration (FDA), products in the gray market are often sold outside the normal distribution chain, at a highly discounted price. These products most often don’t have relevant approvals from the FDA or other regulating authorities. Thus, customers are left in doubt about the safety of the product they are purchasing.
The initiative that Patterson Companies is trying to undertake is aimed at safeguarding the company’s dental customers from various products circulated in the market that can be potentially harmful. Patterson Companies will undertake efforts to improve the company’s supply chain and provide products that come directly from the manufacturer or its authorized distributors.
The program aimed at strengthening the integrity of the company’s dental supply chain underscores the series of positive developments for Patterson Companies’ Dental division.
The company has already announced an agreement to acquire Holt Dental Supply. The takeover is expected to expand Patterson Dental’s local reach while also enhancing its Midwest domination. Also, of late, Patterson Companies has signed strategic collaborations with Quality Systems (QSII) to boost its dental segment.
We feel these initiatives will contribute toward building customer confidence and trustworthiness and will subsequently help generate significant top-line growth.
Zacks Rank
Currently, Patterson Companies carries a Zacks Rank #2 (Buy). Better ranked stocks in the broader medical sector are Bio-Reference Laboratories (BRLI), Halyard Health, Inc. (HYH) and Antares Pharma (ATRS). While Bio-Reference Lab and Halyard Health carries a Zacks Rank #1 (Strong Buy), Antares Pharma has a Zacks Rank #2 (Buy).
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