BD’s acquisition of CareFusion
Becton, Dickinson and Company (BDX), or BD, is a well-diversified company, with the majority of its sales generated from international markets and its strong presence in the United States. With the acquisition of CareFusion, the company has entered new product segments and is better positioned in an industry that is undergoing major disruptions and favors new and more robust business models. The new entity is well positioned to leverage new business opportunities by offering a complete suite of products and services that can help hospitals and other healthcare organizations achieve cost efficiencies and operational effectiveness.
Prior to the CareFusion acquisition, BD had a commoditized product portfolio with strength in economies of scale, an international presence, and a strong distribution network, whereas CareFusion had an innovative product portfolio, technologies, and premium positioning with a major presence in the United States. The acquisition is an excellent strategic fit as BD’s international presence will be leveraged to introduce CareFusion’s strong product portfolio. CareFusion’s premium positioning and pricing benefits will help BD enter and establish itself in non-commoditized premium product segments.
BD generates more than 50% of its sales from international markets. Emerging markets constitute around 25% of its business. China is a major contributor to the company’s sales growth, contributing to approximately 12% of 2015 revenues. Although emerging markets are currently facing difficult economic conditions, BD has managed to remain significantly more resilient than its peers and is expected to contribute to a percentage of emerging market growth in the low to mid-teens.
New product launches
BD executed a number of successful product launches in the past year and is set for some significant innovative products to be launched in 2016 in diverse business segments. Some of BD’s key launches are discussed in the series Becton, Dickinson and Company: Overview of a Medical Device Giant. The diversified and innovative portfolio of product launches planned for the year is expected to generate significant sales growth for BD in the subsequent periods.
New markets and product segments
With the acquisition of CareFusion, BD has established itself as the leader in medication management and patient safety. The acquisitions of CRISI Medical Systems and GenCell Biosystems enabled BD to enter into the safety product and next generation sequencing markets.
Other major players in the medical device industry that have entered into major acquisitions in recent years include Medtronic (MDT), Zimmer Biomet Holdings (ZBH), and Wright Medical Group (WMGI). The iShares Core S&P 500 ETF (IVV), which tracks an index composed of large market capitalization US stocks, invests 0.18% of its portfolio in BD.