Covidien, a medical device manufacturer based in Massachusetts, signed a new agreement to acquire CV Ingenuity, a drug-coated balloon manufacturer. With the acquisition, Covidien plans to invest millions in R&D over the next 24 months.
While the terms of the acquisition were not publicly disclosed, Covidien stated that it plans to invest at least $50 million to further development of technologies held by CV Ingenuity. This breaks down into at least $20 million in R&D costs for the second half of the 2013 fiscal year. An additional $30 million will be invested in the 2014 fiscal year.
According to a press release by the company, CV’s main product is a drug-coated balloon system with a tunable rapid-release capability. This allows for “touch-and-go” treatment of some cardiovascular disorders.
The recent acquisition and added R&D costs will not give Covidien any short-term benefits. The company does not expect to bring any CV-originated products to the market before 2017. However, increased costs due to R&D and the acquisition have not changed earlier financial guidance provided by the company.
In November of 2012, the company stated that it expects sales growth of 3 to 6 percent for 2013. This would correlate with revenues of $12.21 to $12.56 billion. These estimates are in alignment with analysts’ expectations.