Abbott Laboratories (NYSE:ABT) announced it has entered into an agreement to purchase two companies to add to its Medical Device portfolio: IDEV Technologies, a peripheral play ($310 million) and OptiMedica, an ophthalmic device company ($250 million+$150 million milestone based payments).
Deal impact: IDEV Technologies & OptiMedica
Management expects to close both deals before the end of the year and have a neutral impact in 2013-2014 and accretive there after. No change to 2013 EPS guidance. Over time, Abbott Laboratories (NYSE:ABT) estimates each acquisition will turn into a several hundred million dollar revenue opportunity. RBC Capital believe these deals are in line with management's M&A strategy this year and expect these types of transactions going forward (<$500 million growth drivers).
OptiMedica Helps In Faster Growing Laser Cataract Surgery Market
According to RBC Capital, OptiMedica (founded in 2004, privately held, Silicon Valley-based) will expand Abbott’s $1.1 billion vision care business into the femtosecond laser assisted cataract surgery market. Cataract sales represent over 60 percent of Abbott's vision care sales. Abbott estimates that 22 million cataract surgeries are performed annually on a global basis.
OptiMedica is developing Catalys, a precision laser cataract platform that automates key steps in surgery that were previously manual - used frequently with premium intraocular lens (IOLs). Abbott Laboratories (NYSE:ABT) believes the laser system will allow the company to have a more broad competitive product offering and allow it to take share in IOLs. OptiMedica launched its system in international markets in late 2011 and the US in early 2012 with modest revenues owing to limited distribution.
IDEV Should Grow Abbott's Endovascular Business
RBC Capital noted IDEV Technologies, Houston-based, will enhance Abbott's existing peripheral portfolio of guidewires, balloon dilatation catheters and stents. In 2013, they model Abbott’s endovascular business to approach ~$500 million in sales. IDEV’s main product is SUPERA Veritas, a self expanding nitinol stent system with a CE Mark in Europe for broad indications and FDA approval for biliary strictures.
Abbott Laboratories (NYSE:ABT) estimates the superficial femoral artery (SFA) indication is the largest (~$500 million WW; ~$350 million US) and fastest growing segment of the market (mid-to-high single digit grower). Abbott expects SUPERA to receive FDA approval for SFA in 1H:14. SUPERA has competitive data (12-mo primary patency rate of 87 percent and with no stent fractures at of 13.3 months) and novel platform technology that puts Abbott Laboratories (NYSE:ABT) in a position to take peripheral market share.