Covidien ($COV) has made its first R&D foray into South Korea, opening a center to develop new technology, train local physicians and expand its share of a growing market.
The new facility, dubbed the Covidien Center of Innovation Korea, is a $21 million operation that features a surgical lab, an intensive care unit outfitted with a human patient simulator and an auditorium for training seminars. Covidien plans to use its center to tap local talent in its R&D operation, all the while spreading the word about its devices in the country, South Korea Managing Director Peter Kim said.
"There is an increased expectation and focus on medical technology to help improve patient outcomes (in South Korea)," Kim said in a statement. "With the opening of CCI Korea, Covidien can further advance healthcare professional capabilities and enhance collaboration activities between R&D professionals, academic institutions and healthcare professionals to create access to improved standards of care."
Brian King, Covidien's emerging markets president, said South Korea is a key part of the company's global strategy, and the R&D investment follows a series of mutually beneficial deals with local medical societies that both improve the standard of care in South Korea and get Covidien's devices front and center.
With the days of drug-fueled revenue now behind it, Covidien is focused on organic growth in its medical devices business, CEO José Almeida has said, and that means working to maintain its emerging markets expansion over the past year.
However, despite gains in international sales, Covidien watched its profits slip 12.6% to $396 million despite a 3% jump in net revenue its first quarter after spinning out the pharma-focused Mallinckrodt ($MNK). Still, the company expects up to 6% annual sales growth for its medical devices unit, good for up to $3.9 billion, as much as 2% growth for medical supplies, setting the high end at about $1.6 billion for the year.
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