Covidien (NYSE:COV) helped finance the buyout of a pair of small medical device companies in Brazil and China by pulling resources from is operations in the U.S. and Europe, CEO José Almeida told investors this morning at the J.P. Morgan Healthcare conference.
In Brazil, Covidien acquired electrosurgical generator maker WEM Equipamentos Eletrônicos, based in Ribeirao Preto. In China, the Mansfield, Mass.-based medtech firm launched a joint venture with the Changzhou Kangdi Medical Stapler Co., which makes open stapler products.
"It’s easier to do it that way than to build it ourselves," Almeida told MassDevice.com before his presentation in San Francisco today.
Later, Almeida told the audience that Covidien is "just scratching the surface in emerging markets."
"We will move money from businesses to businesses where the opportunity is," he said. "We took money from our businesses in the U.S. and Europe to finance [the deals announced today]. … These are 2 small examples of how we’re going to continue to focus on emerging markets."
Financial terms of the deals were not disclosed. Covidien said the impact on fiscal 2014 sales and earnings is expected to be "minimal, but each deal establishes a presence for Covidien in segments of the Brazil and China markets where the company currently has a limited footprint."
"These deals accelerate our entry into an increasingly important customer segment that we believe will enable us to grow above market over time and increase access to affordable healthcare solutions," emerging markets president Brian King said in prepared remarks. "By combining Covidien’s proven business model with the capabilities of our new partners, we’ll be able to scale the value segment opportunity and help provide more affordable healthcare solutions in new markets."
Almeida said the WEM buyout gives it a new R&D center in Sao Paolo, noting that its R&D operations in emerging markets are part of its plan to drive new products into its pipeline that are tailored to those local markets’ needs.
"We get a significant amount of throughput from our centers in emerging markets," he said.