|Covidien CEO José Almeida|
Still adjusting to life without pharma cash, Covidien ($COV) is projecting a modest growth rate for its first full year as a device-only operation.
The Irish-headquartered giant expects 2014 net sales to come in between 2% and 5% above this year's, figuring to rake in up to $5.8 billion.
That growth is about 30% slower than what Covidien projected for 2013, translating to a best-case 5% jump in the company's medical devices segment, which is slated to reap as much as $3.9 billion this year, and flat sales for the smaller medical supplies business, tabbed at $1.6 billion for 2013.
Covidien spun out its former drug business, Mallinckrodt ($MNK), into a standalone entity in June, and gone are the days of double-digit quarterly growth fueled by generics sales. Instead, Covidien is left with flattening sales for vascular products, its second-largest device unit, and tough climate for reimbursement and pricing around the globe.
But it's not all so dire: Last quarter, endomechanical instruments, Covidien's largest device segment, grew 5% to $632 million, while energy devices leapt 8% to $355 million and the oximetry and patient monitoring unit jumped 13% to $237 million. Covidien is well-positioned to capitalize on that recent growth, CEO José Almeida said, and the company plans to switch up how it does business to react to a changing global market.
"We will make further investments to expand our capabilities, particularly in emerging markets, and to capitalize on the market opportunities across our business," Almeida said in a statement. "We are evolving our commercial model, offering value-added services, and launching a steady stream of new products in all product lines."
Almeida has committed to spending more on R&D over the long term, as Covidien works to develop products in high-growth spaces like renal denervation and drug-eluting balloons.
- read Covidien's guidance