Covidien ($COV) capped 2012 with an end-of-year deal to snatch up CV Ingenuity, a small California company developing a drug-coated balloon designed to treat peripheral artery disease.
Neither side is disclosing financial details, but Covidien indirectly hints at big plans for the technology, which won't hit the FDA regulatory finish line until fiscal 2017. Covidien disclosed that after the deal closes in the 2013 first quarter, its development of CV's lead product will generate more than $20 million in additional R&D spending in the second half of the 2013 fiscal year alone. In fiscal 2014, that investment grows to $30 million (though prior guidance ranges will remain the same). CV is making a drug-coated balloon with a rapid-release technology that is designed to treat vascular blockages, prevent restenosis and help vessels to heal naturally, the companies explain.
This is a deal that makes practical sense on both sides. For the privately-held CV, finding an acquirer with deep pockets will help finish development of its core technology in an era where venture funding levels for medical devices continues to decline. And Covidien, like many large companies, can refuel its product pipeline through acquisition rather than having to expensively start in-house from scratch.
In 2012, growth through acquisition is a strategy that Covidien has pursued more than a few times. Over the last year, the company has snatched up companies focused on surgical tools, medical instruments, safety monitoring technology and pulmonary devices in multiple deals. Once the CV acquisition closes, Covidien plans to blend its business into its medical devices/vascular product line.
- read the release
- here's Reuters' take
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