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FDA Warning Letter to Zimmer Biomet Resolved, Boosts Confidence

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FDA warning letter

On June 13, 2017, Zimmer Biomet Holdings (ZBH) announced that the warning letter from the FDA (U.S. Food & Drug Administration) issued in June 2015 and relating to the company’s Zhejiang manufacturing facility in China has been closed. The news bodes well for the company, which claims it as a measure of its quality progress and operational excellence.

ZBH stock rose around 0.38% the day the announcement was made. The iShares US Medical Devices ETF (IHI), which holds approximately 3.7% of its total holdings in ZBH, rose 0.76% that day. IHI is one of the largest US medical device ETFs.

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Emerging market growth

The development is expected to accelerate Zimmer Biomet’s emerging market growth. The company has been focusing on harnessing the emerging market opportunity for long-term growth. It has made a number of strategic investments in emerging market countries, including China, in recent years. The company has a strong presence in these nations and is continually expanding its footprint through its four-pronged growth strategy, as you can see in the above graph.

Other major medical device companies, including Becton Dickinson (BDX), Medtronic (MDT), and Thermo Fisher Scientific (TMO) are also expanding their presence in emerging nations and tapping the potential growth opportunity in these markets.

Zimmer Biomet has seen growth across emerging markets through strategic acquisitions and collaborations. It has set up various manufacturing and sales facilities across these markets. The company has seen tremendous growth in its market share, driven by its expansion initiatives.

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