Covidien (NYSE:COV) and Allergan Inc. (NYSE:AGN) extended a deal that has Covidien promoting Allergan’s Lap-Band anti-obesity device to surgeons and physicians in the United States.
The two companies began their co-promotion efforts in November, 2007, helping contribute to a sharp rise in sales of the gastric band for Irvine, Calif.-based Allergan the following year despite the launch of a competing product by a Johnson & Johnson (NYSE:JNJ) operating unit.
Specific terms of the new pact, announced Monday, were not disclosed.
The Lap-Band is an adjustable, elastic band placed around the stomach through a small incision that creates a small pouch at the top of the stomach. The pouch fills up more quickly than patients’ normally sized stomach, making them feel "full" while eating less food.
Unit sales of the device soared in 2008, with the Lap-Band being used in about 100,000 procedures, roughly doubling 2007 levels. Under the marketing agreement, surgical-device sales representatives from Covidien promote the device to clients as a complement to the Covidien’s own line of bariatric devices. Allergan also has its own sales force in the field and recognizes all Lap-Band revenues on its books.
In addition to Lap-Band, which has been available in the United States since 2001, Allergan also markets the BIB system, a silicone balloon filled with saline to reduce the size of the stomach. Revenues for the company’s obesity intervention division took a hit in 2009, totaling $190.6 million through the first nine months of the year, with Allergan executives citing a decline in consumer spending and currency swings for the 15-percent year-over-year dip.
Officials also blame increased competition from the Realize gastric band produced by the Ethicon Endo-Surgery unit of J&J.