Covidien to Buy CV Ingenuity
On Wednesday, health-care products manufacturer Covidien (NYS: COV) announced a definitive agreement to acquire privately held "Drug Coated Balloon" developer CV Ingenuity. Financial terms of the acquisition were not disclosed.
CV's product is described in a statement on the purchase as being "still in the investigational stage." As such, Covidien noted that it expects to spend more on research and development "for the next several years" as it funds clinical development of this and other CV products. R&D spending for the second half of 2013 at Covidien is expected to rise $20 million, followed by $30 million higher R&D costs in all of fiscal 2014. Higher costs are likely to continue past that date, as Covidien says it "does not anticipate receiving United States Food and Drug Administration approval for a DCB product using the CV Ingenuity technology until fiscal 2017."
Regardless, with an annual R&D budget surpassing $600 million, the additional spending appears likely to amount to no more than a 5% increase. Meanwhile, sales at the company are still expected to rise in the low- to mid-single digits in fiscal 2013.
Shares of Covidien are down 0.5% on today's news, at $56.88.
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