Headquarters: Franklin Lakes, New Jersey
2024 projected sales: $19.2 billion
2024 projected R&D spend: $1.36 billion
2017 sales: $11 billion
2017 R&D spend: $774 million
While most of 2024’s 10 largest medtech companies are projected to hold steady in their positions, BD is set to break from the pack in the coming years—leapfrogging three companies to take a spot in the top five, after its late-2017 acquisition of C.R. Bard.
Currently the eighth-largest medtech company by 2017 revenues, BD could edge out Philips, Stryker and Roche by posting 2024 sales of just over $19 billion—with 8.3% in annual growth propped up by Bard’s offerings in vascular access, catheters and pumps across high-growth markets such as biosurgery and oncology.
Before that, however, BD was the only company in Evaluate’s tabulations to show a drop in sales from 2016 to 2017, with revenues falling 3.6% from $11.4 billion to $11.0 billion, mainly due to the spinning out of its respiratory device business into a new joint venture with private equity firm Apax Partners.
But going forward, its $24 billion deal with Bard is expected to create a powerhouse: the “undisputed leader” in vascular access products, Jefferies analysts predicted after the deal was announced in April 2017. The merger married BD’s portfolio of needles, syringes and drug delivery devices with Bard’s peripheral catheters and ports, plus its 16,000 employees as a wholly owned subsidiary, when it closed Dec. 29, 2017.
To help finance the deal, BD took out a $10 billion loan and sold $4.5 billion in equities and other securities, with plans to fund another tranche of the takeover by issuing $8 billion in new stock to Bard’s shareholders. To help make that back, BD said it hopes to achieve cost savings of $300 million a year by 2020.
And with BD’s fiscal calendar ending Sept. 30 of this year, the move is already showing strong returns. BD posted 32.2% growth in its fiscal year 2018 revenues, which reached $15.98 billion—more than halfway toward Evaluate’s 2024 target of $19.2 billion, with more than five years left to go.
By segment—split among BD’s medical, interventional and life sciences businesses—the company’s medical revenues were up 16.1% compared to the year before, at $8.6 billion, driven by its pharmaceutical management and drug delivery units.
Meanwhile, life sciences posted an 8.6% gain, for $4.3 billion. Its new interventions segment, holding a majority of Bard’s offerings in peripheral devices, urology and critical care, brought in another $3.0 billion.
BD also projects between 8.5% and 9.5% growth in FY2019, or 5.0% to 6.0% on a currency-neutral basis, in its look-ahead guidance—which falls in the ballpark of Evaluate’s prediction of 8.3% compounded annual growth between 2017 and 2024.
Earlier this year, BD also found itself in the FDA’s crosshairs, receiving a nearly 4,000-word warning letter encompassing multiple aspects of the company’s operations—including unauthorized changes to devices and failing to follow good manufacturing practices.
The changes included modifications to the rubber stoppers used in BD’s Vacutainer K2EDTA blood collection tubes, made in 2013 without notifying the agency. FDA investigators said the changes were made without assessing the clinical performance of the devices. BD later updated its instructions for use of certain Vacutainer tubes, saying a material added in 1996 made them incompatible with certain clinical tests for lead content.