BD CEO Upbeat On Medication Management, Emerging Markets
By Jof Enriquez,
Follow me on Twitter @jofenriq
The merger between Becton Dickinson (BD) and CareFusion has made the combined entity the worldwide leader in the $20 billion medication management industry, according to BD’s chief executive. BD expects to reap benefits from the merger over the long-term, including in emerging markets, where it performed relatively better than other medtech companies in the preceding quarter.
BD acquired CareFusion for $12.2 billion last year to create one of the five biggest medical device companies in the world, according to the New York Times. BD CEO and president Vincent A. Forlenza called the merger a "perfect strategic fit" because the portfolios of BD and CareFusion complement each other. BD makes syringes and intravenous catheters, through which flow medications from CareFusion's automated dispensing systems and infusion pumps.
One year after the deal, BD claims to have accelerated the projected savings from the merger. In its fourth quarter earnings report, the company raised its cost synergy target from $250 million to between $325 million and $350 million as the company exits fiscal year 2018, according to an earnings call transcript. It reported $50 million savings in the first six months of the deal, with another $100 million estimated for next year on a full-year basis.
"The powerful combination of BD and CareFusion has already delivered measurable results,” Forlenza told analysts during the call, according to Seeking Alpha. "As we continue to make progress with the integration of these two great companies, I've become increasingly confident in our ability to deliver end-to-end solutions that increase efficiencies, reduce medication errors, and improve patient safety in all healthcare settings."
"Through the acquisition of CareFusion, we significantly expanded our presence and are now the global leader in a $20 billion medication management industry," he added, according to the call transcript.
Also in the earnings call, BD announced new product launches for fiscal year 2016, including a new insulin infusion set, the Pyxis Mini tabletop medication management platform, the UltraTouch push-button blood collection sets, and the BD Barricor tubes, which BD claims will enhance lab sample quality and speed turnaround time.
Even though BD announced a 40 percent drop in profit for the fourth quarter versus last year, this was offset by strong revenue, which increased 38.9 percent to $3.06 billion, from $2.2 billion in the same period last year, beating estimates, RTT News reported. Fourth quarter net income was $181 million, down from $301 million in the previous year.
According to Zacks, BD's acquisition of CareFusion gives the company plenty of opportunities, not only in streamlining operating costs, but also as a catalyst for growth in emerging markets, where BD reported strong growth in the past quarter, despite macroeconomic headwinds and moderation in China and Brazil.
"Emerging markets grew over 9 percent this year and continued to be a key driver of growth for the company. We're also working to create new growth opportunities for CareFusion products in these markets and expanding their global reach by leveraging BD's international infrastructure. We currently have numerous products in the registration process across multiple geographies," Forlenza said in the call.
He said that even though China posted decreased growth rate, in absolute terms, the market has been unchanged, and prospects over the long-term are optimistic.
Christopher R. Reidy, BD's CFO, remarked, “we feel real good about the China growth. If you look at this year over 15 percent and next year low to mid-teens, that's really strong growth, continues to be strong growth and outpaces our peers from a growth standpoint.”