Covidien Backs FDA on Acetaminophen - Analyst Blog

Ireland-based healthcare product maker Covidien plc (COV) has backed the U.S. Food and Drug Administration's (FDA) recent move on the safe use of acetaminophen, a drug used to relieve pain and lower fever.

The FDA recently requested manufacturers to restrict the use of acetaminophen in pain reliever drugs to 325 milligrams (mg) per pill or capsule within three years given the risk of liver damage. Moreover, the regulator has announced new labeling for prescription drugs containing acetaminophen due to the potential hazardous side effect. 

Acetaminophen, the active ingredient in Tylenol (a popular pain reliever), is one of the most commonly used pain relievers found in many over-the-counter medications. However, its overdose can seriously damage the liver.  

Covidien is the sole manufacturer of acetaminophen in North America. Moreover, it manufactures prescription drugs which combine acetaminophen with other pain relievers such as hydrocodone and oxycodone (available in 325 mg formulations).

While supporting the FDA's move to ensure patient safety, Covidien stated that the agency's action will not pose a material impact on its Pharmaceuticals division sales as well as operating income and margin for fiscal 2011. The company is slated to report its first-quarter 2011 results on February 1.

Covidien is a leading global healthcare products company that develops and markets medical solutions for better patient outcomes. The company's core medical devices business faces stiff competition from Johnson & Johnson (JNJ), Becton Dickinson (BDX) and C.R. Bard (BCR).

Covidien boasts a well diversified product and technology portfolio. The company remains committed to rolling out new products and technologies, focusing on fast-growing markets, and boosting market share in core segments through investments in sales and marketing infrastructure.

The acquisition of eV3 in July 2010 has bolstered Covidien's foothold in the peripheral vascular and neurovascular markets. Moreover, the divestiture of its specialty chemicals and sleep therapy product line has enabled Covidien to rationalize its product portfolio and reallocate resources to faster-growing, higher-margin businesses.

However, Covidien's Pharmaceuticals business remains challenged by aggressive competition and pricing pressure, which has contributed to erosion in generic products sales. Moreover, its hernia repair franchise has challenges ahead as C.R. Bard continues to strengthen its foothold in this market with new products.

 
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