Becton Dickinson CEO Details Three-Pronged Strategy To Drive Sustainable Growth
Becton Dickinson’s (BD) 2017 Q1 report topped Wall Street projections for both sales and earnings, despite a 4.4 percent dip in revenues compared with 2016 that resulted from the divestiture of its respiratory device unit. BD CEO Vince Forlenza reported that 2017 was off to a “strong start” and detailed a three-part plan to drive long-term sustainable growth, which includes a strong product pipeline, a move toward solutions, and geographic expansion.
BD first began to shop its respiratory device unit — which included ventilators, breathing tubes, and oxygen masks — shortly after acquiring CareFusion in 2015, and sources at the time told Bloomberg that the company was keen to offload unwanted assets in a move to restructure. The Wall Street Journal reported in November that restructuring costs were having a negative impact on company profits.
Complete divestiture of the respiratory unit was completed in October 2016, stated Forlenza in an earnings call, and that unit now is part of a joint venture with Apax called Vyaire Medical. Forlenza added that BD continues to make “strong progress” in driving revenue synergies related to the CareFusion acquisition.
In a call last November, Forlenza remarked on emerging markets where BD was “well-positioned” for growth. CFO Chris Reidy confirmed that optimism wasn’t unfounded on a recent call, stating that emerging market revenues grew by 7.7 percent, reflecting strong performance in China and Latin America that was slightly offset by slowdowns in the Middle East and Africa.
Reidy also reported revenue growth in both BD’s Medical and Life Science segments. Diabetes care is up by 4.5 percent, medication and procedural solutions is up by 4.3 percent, due to growth in infection prevention. Diagnostics systems grew by 6.4 percent, which represents “continued strength” in core microbiology and flu-related sales.
“Our results this quarter continue to demonstrate the breadth and diversity of our growth drivers within our portfolio,” said Forlenza in a press release. “Our first quarter performance, combined with our current outlook, gives us the confidence to raise our currency-neutral earnings guidance for fiscal year 2017.”
At a JP Morgan Healthcare Conference, Forlenza outlined the company’s long term strategy, which he said would drive five percent-plus revenue growth and 10 percent-plus earnings growth in the coming years.
“As we partner with healthcare systems to address their key priorities, we are broadening our served markets through our focus on major healthcare challenges, where we believe we can have the greatest impact,” said Forlenza on the call.
The CEO remarked that moving toward solutions-based care is one part of a three-component plan to drive growth. “As we do that and move in to adjacencies, we are becoming more impactful across our businesses on these major healthcare issues.”
Also key to growth is the company’s innovative pipeline and geographic expansion. BD is working with Medtronic toward full commercialization of BD Flowsmart Technology insulin infusion sets, and there has been strong growth with BD Max and the company’s portfolio of assays, including a vaginal assay launched this quarter. Last December, BD launched an advanced prefillable syringe for higher volume injections of biologics.