Bard Boosts Portfolio with Lutonix Acquisition

C.R. Bard Inc. is determined to make a fresh start in the new year. The Murray Hill, N.J.-based OEM is buying arterial device manufacturer Lutonix Inc. to diversify its offering of heart treatment devices.

Besides the $225 million purchase price, Bard has agreed to pay another $100 million to Lutonix upon premarket approval of the company’s drug-coated percutaneous transluminal angioplasty balloon, otherwise known as a PTA device. The deal—structured as a merger—will add about 25 cents per share to Bard’s 2012 earnings.

The acquisition occurs as Bard battles slow domestic sales growth due to increased competition and fewer hospital procedures. The company reported $486.5 million in U.S. sales during the third quarter of 2011 (ended Sept. 30), a 2 percent increase compared with the same period in 2010. Sales outside of the United States, by contrast, shot up 17 percent (on a reported basis) to $232.7 million.

Such tepid domestic revenue growth has prompted Bard to enter new markets or acquire new technology to broaden its array of products. The purchase of Lutonix will allow the firm to secure a solid foothold in the global peripheral vascular market for drug-coated balloons, which is expected to reach about $1 billion annually over the next decade. Drug-coated balloons are generating increasing interest among patients and doctors looking for ways to treat diseased coronary arteries without permanent implants. The PTA device from Lutonix is not yet approved in the United States, but was granted CE Mark approval in Europe, where Bard will begin marketing and selling the product.

Researchers are conducting an investigational device exemption trial that will compare Lutonix’s drug-coated balloon with standard balloon angioplasty. The trial will enroll 476 patients across 55 sites, including 40 in the United States and 15 in Europe.

“In our evaluations, Lutonix has the only third-generation drug-coated balloon technology,” Bard Chairman and Chief Executive Timothy M. Ring said in prepared remarks. “This position of leadership in a large potential market, combined with our current market leadership in PTA, makes this acquisition a compelling strategic fit.”

Bard’s acquisition of Lutonix comes on the heels of its $250 million purchase of Medivance Inc. in late October. The Louisville, Colo.-based Medivance develops, manufactures and sells products that help improve patient outcomes by controlling the body’s core temperature after traumatic medical events. Bard executives claim Medivance’s product lineup will help the company improve its critical care offering.

“This merger is a great strategic fit for Bard as Medivance’s Targeted Temperature Management product line is synergistic with our critical care sales call point, and their technology addresses a large unmet need in a market that is growing double digits. This acquisition represents an important building block for our critical care product offering,” Ring noted when the acquisition was announced.