07.22.21
Rank: #6 (Last year: #5)
$17.11 Billion
Prior Fiscal: $17.29 Billion
Percentage Change: -1%
No. of Employees: 72,000
Global Headquarters: Franklin Lakes, N.J.
KEY EXECUTIVES:
Vincent A. Forlenza, Chairman
Thomas E. Polen, President and CEO
Simon D. Campion, Exec. VP and President, Interventional Segment
Patrick K. Kaltenbach, Exec. VP and Chief Technology Officer
Dave Hickey, Exec. VP and President, Life Sciences Segment
Alberto Mas, Exec. VP and President, Medical Segment
Kevin Kelly, Worldwide President, BD Surgery
Gary M. Cohen, Exec. VP, Global Health, and President, BD Foundation
Alexandre Conroy, Exec. VP and Chief Integrated Supply Chain Officer
John E. Gallagher, Sr. VP, Treasurer, and CFO, Medical Segment
Roland Goette, Exec. VP and President, EMEA
James Lim, Exec. VP and President, Greater Asia
Christopher R. Reidy, Exec. VP, CFO, and Chief Administrative Officer
David Shan, Exec. VP and Chief Quality Officer
William R. Sigmund, Exec. VP and Chief Medical Officer
Ami E. Simunovich, Exec. VP and Chief Regulatory Officer
Trail running etiquette is not quite as simple as it might seem.
There are no concrete rules or standards, only ambiguous protocols based primarily on common sense and social mores. Off-road running etiquette dwells within the gray area of governance, rendering it subject to interpretation and misunderstanding, and ultimately leading to a tapestry of different compliance practices.
Despite the variability, there are some basic principles most trail runners follow, the most important of which is following posted signs. Other generally accepted guidelines include yielding to hikers or walkers, passing on the left, staying on marked trails, being courteous, and never littering.
Accomplished endurance runner Tom Polen has observed these informal edicts so many times during his countless wilderness sprints that he’s added a few of his own to the mix. Polen’s “rules,” however, are just as applicable to business management as they are to the trail.
“When you’re following the light of your headlamp through the woods at 2 a.m., a lot of thoughts pop into your head,” BD’s president/CEO wrote in a brief LinkedIn blog two years ago, “and that’s when I realized that many of the strategies you use in a trail run are applicable to success in business.”
Those strategies became invaluable to Polen last year as he piloted BD through the world’s worst health crisis in a century. The new chief executive specifically employed three trail run strategies to address the enormous challenges wrought by COVID-19:
Look down the trail instead of down at your feet. Beginners tend to focus on the path directly in front of them, Polen wrote in his blog, while more experienced runners, with practice,” stop worrying about stumbling and begin to look further and further ahead, intuitively reading the trail and adjusting well ahead of time.”
ANALYST INSIGHTS: Buoyed by its COVID financial successes due to its Life Sciences businesses, BD has been making some portfolio decisions. They are divesting their Diabetes business segment to give it a chance to remain competitive with a renewed focus. In the meantime, BD will continue to grow thru a tuck-in M&A strategy.
Having been running the healthcare trail for 124 years now, BD has long mastered the art of strategic foresight. Accordingly, when the coronavirus first surfaced, the company rapidly shifted its focus and began developing diagnostic tests (BD MAX), safeguarded its critical care supplies (catheters, probe covers, needle-free connector tech), and increased production of injection devices for future vaccination efforts. BD also is priming itself for forthcoming pandemics by investing roughly $1.2 billion to expand and upgrade its manufacturing capacity for pre-fillable syringes and advanced drug delivery systems.
Obstacles can be turned into advantages. Rocks and roots that trip up novice runners often can become springboards for advanced sprinters, helping them traverse the bigger obstacles blocking their progress, Polen’s blog noted.
The rocks along BD’s bumpy path last year proved more of an advantage than liability, providing the firm with the necessary momentum to clear some serious COVID-19-induced financial hurdles. Specifically, BD compensated for declining Surgery sales (from elective procedure cancellations) by catering to demand for sample collection tools and increasing access to its automated in-vitro diagnostics molecular platform. The company also partnered with Birmingham, Ala.-based BioGX Inc. in March 2020 to develop and commercialize a diagnostic assay for on-site (hospital) coronavirus testing and detection, with results available in under three hours; the test won U.S. Food and Drug Administration (FDA) emergency use authorization last April.
Three months later, BD teamed up with BARDA (Biomedical Advanced Research and Development Authority) on a $70 million project to boost needle and syringe manufacturing operations and capacity in Nebraska, in conjunction with Operation Warp Speed.
You’re not alone out there. Polen relied on a seven-member team to complete a 135-mile charity race in the spring of 2019. Each member “owned” a part of the relay, and all participants supported each other. “We could feel the support of our teammates even when we weren’t together, which helped each of us power ahead,” Polen recalled in his blog.
Polen similarly depended on his 70,000-strong BD team to rapidly deploy the company’s capabilities, expertise, and scale to help customers diagnose, monitor, and care for COVID-19 patients, and prepare for mass vaccinations.
“...in 2020, few businesses in the world escaped the impact of the global pandemic. For some, it was an existential threat; for BD, it was a call to action as our more than 70,000 associates around the world rallied around our Purpose of advancing the world of health...” Polen told shareholders in BD’s 2020 annual report. “The perseverance of our associates—and the notable success of our BD Life Sciences-Integrated Diagnostic Solutions team in developing innovative COVID-19 diagnostic testing—allowed the business to return to revenue growth in the fiscal fourth quarter and finish the year with revenues down slightly on a year-over-year basis.”
Slightly indeed: Revenues slipped 1 percent to $17.1 billion compared with FY19 but gross profit and operating income fell more sharply, with the former tumbling 8.6 percent to $7.57 billion and the latter falling 15.7 percent to $1.48 billion. Basic EPS, meanwhile, declined by nearly one-third (31.4 percent) to $2.75.
A solid performance from BD’s Life Sciences Segment helped stave off further losses and kept the company’s FY20 revenue close to the previous fiscal year’s levels. Total Life Sciences proceeds rose 8.7 percent to $4.67 billion due to exceptional pandemic-triggered demand for diagnostics, especially tests. Interestingly, though, the coronavirus had a contradictory impact on the segment’s two business units.
Integrated Diagnostic Solutions revenue, for example, swelled 13.7 percent to $3.53 billion from robust sales of COVID-19 tests (the BD Veritor Plus and BD Max systems). Most of the increase can be attributed to the 32.1 percent growth in Diagnostic Systems proceeds (to $2 billion), offset only marginally by a 4.6 percent decline in Preanalytical Systems sales (to $1.48 billion).
The Biosciences unit suffered the opposite fate: Revenue shrunk 4.3 percent to $1.14 billion as the pandemic reduced demand for instruments and reagents, and slowed routine research and clinical lab activity.
Comparable COVID-19 paradoxes beset the business units in BD’s two other reporting segments. Interventional Segment sales fell 4.2 percent ($164 million) to $3.76 billion despite numerous product launches across its three business units.
New innovations from Peripheral Intervention failed to prevent a 4 percent ($63 million) revenue contraction to $1.51 billion. Products debuting during the fiscal year (Oct. 1, 2019-Sept. 30, 2020) included the LUTONIX Drug Coated Balloon (DCB) and LUTONIX 018 and 300 mm DCB; the Elevation Breast Biopsy System (featuring a TriConcave tip, an integrated coaxial cannula, and average nine-second sampling time); and the Caterpillar Micro Arterial Embolization device, available in three sizes (U.S.) to treat target artery diameters between 1.5 mm and 7 mm. The Caterpillar is BD’s first interventional oncology product, and has a dual-action design with opposing nitinol fiber segments and an occlusion membrane.
Surgery’s new products could not overcome the void left by thousands of elective procedure deferrals/cancellations last spring and summer; thus, unit sales fell 9.7 percent ($121 million) to $1.12 billion. The unit made a valiant effort to turn a profit though, releasing a new inguinal hernia mesh and an infection prevention solvent.
The robotic-compatible version of BD’s 3DMAX Light Mesh is an inguinal hernia solution that conforms to patients’ individual anatomies and retains its shape after laparoscopic insertion. PurPrep, on the other hand, is described as the “first and only fully sterile povidone- iodine plus isopropyl alcohol single-use antiseptic skin preparation commercially available in the United States.”
Only the Interventional Segment’s Urology and Critical Care business unit defied the odds and turned a profit in the wake of COVID-19, growing sales $20 million, or 1.8 percent, to $1.1 billion. Capitalizing on the company’s developing position in female incontinence, the unit launched drydock 2.0, a solution intended to facilitate home use of the PureWick Female External Catheter.
The financial dichotomy within the Life Sciences and Interventional segments existed in the Medical segment too, but its FY20 pecuniary woes cannot be blamed solely on COVID-19. Medication Delivery Solutions sales—down 7.6 percent to $3.55 billion—were partially impacted by a new volume-based procurement process adopted by several Chinese provinces. U.S. pricing pressures doomed Diabetes Care revenue, which slid 2.4 percent to $1.08 billion, and a Class I recall undermined Medication Management Solutions proceeds.
BD recalled its Alaris System infusion pumps in February 2020 over errors that could interrupt or delay infusion, and induce slower or faster medication delivery (under-infusion and over-infusion, respectively). The recall affected 774,000 units sold in the United States between July 2004 and October 2019.
“High-risk patient populations who are receiving life sustaining infusions are at the greatest risk of harm. For these patients, stopping or significantly lowering the infusion rate can lead to serious injury or death,” BD warned customers in a Feb. 4, 2020, recall notice.
Alaris pump system issues involving faulty keypads, outdated software, and hardware flaws prompted a flurry of recalls in FY20, many of which followed the FDA inspection of BD’s Medication Management Solutions facility in San Diego, and subsequent citation of potential violations in a Form 483.
Those recalls, and the suspension of Alaris infusion pump shipments, largely contributed to a 7.1 percent decline in FY20 Medication Management Solutions revenue (to $2.45 billion). The loss, however, was partially offset by international infusion pump sales and pandemic-related infusion pump orders placed in the United States with medical necessity certification.
The Medication Management Solutions shortfall also was somewhat counteracted by an 8.4 percent gain in Pharmaceutical Systems sales (to $1.58 billion). Growth was attributed to “continued strength in demand for prefillable products,” according to BD’s annual report.
Last May, BD issued $3 billion in equity to strengthen its balance sheet and reduce its net leverage. “At the same time,” Polen noted to shareholders, “we were also able to make prudent reinvestments into our business to strengthen our core and further advance our long-term growth initiatives, including tuck-in acquisitions.”
BD closed a half-dozen deals in FY20, including:
$17.11 Billion
Prior Fiscal: $17.29 Billion
Percentage Change: -1%
No. of Employees: 72,000
Global Headquarters: Franklin Lakes, N.J.
KEY EXECUTIVES:
Vincent A. Forlenza, Chairman
Thomas E. Polen, President and CEO
Simon D. Campion, Exec. VP and President, Interventional Segment
Patrick K. Kaltenbach, Exec. VP and Chief Technology Officer
Dave Hickey, Exec. VP and President, Life Sciences Segment
Alberto Mas, Exec. VP and President, Medical Segment
Kevin Kelly, Worldwide President, BD Surgery
Gary M. Cohen, Exec. VP, Global Health, and President, BD Foundation
Alexandre Conroy, Exec. VP and Chief Integrated Supply Chain Officer
John E. Gallagher, Sr. VP, Treasurer, and CFO, Medical Segment
Roland Goette, Exec. VP and President, EMEA
James Lim, Exec. VP and President, Greater Asia
Christopher R. Reidy, Exec. VP, CFO, and Chief Administrative Officer
David Shan, Exec. VP and Chief Quality Officer
William R. Sigmund, Exec. VP and Chief Medical Officer
Ami E. Simunovich, Exec. VP and Chief Regulatory Officer
Trail running etiquette is not quite as simple as it might seem.
There are no concrete rules or standards, only ambiguous protocols based primarily on common sense and social mores. Off-road running etiquette dwells within the gray area of governance, rendering it subject to interpretation and misunderstanding, and ultimately leading to a tapestry of different compliance practices.
Despite the variability, there are some basic principles most trail runners follow, the most important of which is following posted signs. Other generally accepted guidelines include yielding to hikers or walkers, passing on the left, staying on marked trails, being courteous, and never littering.
Accomplished endurance runner Tom Polen has observed these informal edicts so many times during his countless wilderness sprints that he’s added a few of his own to the mix. Polen’s “rules,” however, are just as applicable to business management as they are to the trail.
“When you’re following the light of your headlamp through the woods at 2 a.m., a lot of thoughts pop into your head,” BD’s president/CEO wrote in a brief LinkedIn blog two years ago, “and that’s when I realized that many of the strategies you use in a trail run are applicable to success in business.”
Those strategies became invaluable to Polen last year as he piloted BD through the world’s worst health crisis in a century. The new chief executive specifically employed three trail run strategies to address the enormous challenges wrought by COVID-19:
Look down the trail instead of down at your feet. Beginners tend to focus on the path directly in front of them, Polen wrote in his blog, while more experienced runners, with practice,” stop worrying about stumbling and begin to look further and further ahead, intuitively reading the trail and adjusting well ahead of time.”
ANALYST INSIGHTS: Buoyed by its COVID financial successes due to its Life Sciences businesses, BD has been making some portfolio decisions. They are divesting their Diabetes business segment to give it a chance to remain competitive with a renewed focus. In the meantime, BD will continue to grow thru a tuck-in M&A strategy.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
Having been running the healthcare trail for 124 years now, BD has long mastered the art of strategic foresight. Accordingly, when the coronavirus first surfaced, the company rapidly shifted its focus and began developing diagnostic tests (BD MAX), safeguarded its critical care supplies (catheters, probe covers, needle-free connector tech), and increased production of injection devices for future vaccination efforts. BD also is priming itself for forthcoming pandemics by investing roughly $1.2 billion to expand and upgrade its manufacturing capacity for pre-fillable syringes and advanced drug delivery systems.
Obstacles can be turned into advantages. Rocks and roots that trip up novice runners often can become springboards for advanced sprinters, helping them traverse the bigger obstacles blocking their progress, Polen’s blog noted.
The rocks along BD’s bumpy path last year proved more of an advantage than liability, providing the firm with the necessary momentum to clear some serious COVID-19-induced financial hurdles. Specifically, BD compensated for declining Surgery sales (from elective procedure cancellations) by catering to demand for sample collection tools and increasing access to its automated in-vitro diagnostics molecular platform. The company also partnered with Birmingham, Ala.-based BioGX Inc. in March 2020 to develop and commercialize a diagnostic assay for on-site (hospital) coronavirus testing and detection, with results available in under three hours; the test won U.S. Food and Drug Administration (FDA) emergency use authorization last April.
Three months later, BD teamed up with BARDA (Biomedical Advanced Research and Development Authority) on a $70 million project to boost needle and syringe manufacturing operations and capacity in Nebraska, in conjunction with Operation Warp Speed.
You’re not alone out there. Polen relied on a seven-member team to complete a 135-mile charity race in the spring of 2019. Each member “owned” a part of the relay, and all participants supported each other. “We could feel the support of our teammates even when we weren’t together, which helped each of us power ahead,” Polen recalled in his blog.
Polen similarly depended on his 70,000-strong BD team to rapidly deploy the company’s capabilities, expertise, and scale to help customers diagnose, monitor, and care for COVID-19 patients, and prepare for mass vaccinations.
“...in 2020, few businesses in the world escaped the impact of the global pandemic. For some, it was an existential threat; for BD, it was a call to action as our more than 70,000 associates around the world rallied around our Purpose of advancing the world of health...” Polen told shareholders in BD’s 2020 annual report. “The perseverance of our associates—and the notable success of our BD Life Sciences-Integrated Diagnostic Solutions team in developing innovative COVID-19 diagnostic testing—allowed the business to return to revenue growth in the fiscal fourth quarter and finish the year with revenues down slightly on a year-over-year basis.”
Slightly indeed: Revenues slipped 1 percent to $17.1 billion compared with FY19 but gross profit and operating income fell more sharply, with the former tumbling 8.6 percent to $7.57 billion and the latter falling 15.7 percent to $1.48 billion. Basic EPS, meanwhile, declined by nearly one-third (31.4 percent) to $2.75.
A solid performance from BD’s Life Sciences Segment helped stave off further losses and kept the company’s FY20 revenue close to the previous fiscal year’s levels. Total Life Sciences proceeds rose 8.7 percent to $4.67 billion due to exceptional pandemic-triggered demand for diagnostics, especially tests. Interestingly, though, the coronavirus had a contradictory impact on the segment’s two business units.
Integrated Diagnostic Solutions revenue, for example, swelled 13.7 percent to $3.53 billion from robust sales of COVID-19 tests (the BD Veritor Plus and BD Max systems). Most of the increase can be attributed to the 32.1 percent growth in Diagnostic Systems proceeds (to $2 billion), offset only marginally by a 4.6 percent decline in Preanalytical Systems sales (to $1.48 billion).
The Biosciences unit suffered the opposite fate: Revenue shrunk 4.3 percent to $1.14 billion as the pandemic reduced demand for instruments and reagents, and slowed routine research and clinical lab activity.
Comparable COVID-19 paradoxes beset the business units in BD’s two other reporting segments. Interventional Segment sales fell 4.2 percent ($164 million) to $3.76 billion despite numerous product launches across its three business units.
New innovations from Peripheral Intervention failed to prevent a 4 percent ($63 million) revenue contraction to $1.51 billion. Products debuting during the fiscal year (Oct. 1, 2019-Sept. 30, 2020) included the LUTONIX Drug Coated Balloon (DCB) and LUTONIX 018 and 300 mm DCB; the Elevation Breast Biopsy System (featuring a TriConcave tip, an integrated coaxial cannula, and average nine-second sampling time); and the Caterpillar Micro Arterial Embolization device, available in three sizes (U.S.) to treat target artery diameters between 1.5 mm and 7 mm. The Caterpillar is BD’s first interventional oncology product, and has a dual-action design with opposing nitinol fiber segments and an occlusion membrane.
Surgery’s new products could not overcome the void left by thousands of elective procedure deferrals/cancellations last spring and summer; thus, unit sales fell 9.7 percent ($121 million) to $1.12 billion. The unit made a valiant effort to turn a profit though, releasing a new inguinal hernia mesh and an infection prevention solvent.
The robotic-compatible version of BD’s 3DMAX Light Mesh is an inguinal hernia solution that conforms to patients’ individual anatomies and retains its shape after laparoscopic insertion. PurPrep, on the other hand, is described as the “first and only fully sterile povidone- iodine plus isopropyl alcohol single-use antiseptic skin preparation commercially available in the United States.”
Only the Interventional Segment’s Urology and Critical Care business unit defied the odds and turned a profit in the wake of COVID-19, growing sales $20 million, or 1.8 percent, to $1.1 billion. Capitalizing on the company’s developing position in female incontinence, the unit launched drydock 2.0, a solution intended to facilitate home use of the PureWick Female External Catheter.
The financial dichotomy within the Life Sciences and Interventional segments existed in the Medical segment too, but its FY20 pecuniary woes cannot be blamed solely on COVID-19. Medication Delivery Solutions sales—down 7.6 percent to $3.55 billion—were partially impacted by a new volume-based procurement process adopted by several Chinese provinces. U.S. pricing pressures doomed Diabetes Care revenue, which slid 2.4 percent to $1.08 billion, and a Class I recall undermined Medication Management Solutions proceeds.
BD recalled its Alaris System infusion pumps in February 2020 over errors that could interrupt or delay infusion, and induce slower or faster medication delivery (under-infusion and over-infusion, respectively). The recall affected 774,000 units sold in the United States between July 2004 and October 2019.
“High-risk patient populations who are receiving life sustaining infusions are at the greatest risk of harm. For these patients, stopping or significantly lowering the infusion rate can lead to serious injury or death,” BD warned customers in a Feb. 4, 2020, recall notice.
Alaris pump system issues involving faulty keypads, outdated software, and hardware flaws prompted a flurry of recalls in FY20, many of which followed the FDA inspection of BD’s Medication Management Solutions facility in San Diego, and subsequent citation of potential violations in a Form 483.
Those recalls, and the suspension of Alaris infusion pump shipments, largely contributed to a 7.1 percent decline in FY20 Medication Management Solutions revenue (to $2.45 billion). The loss, however, was partially offset by international infusion pump sales and pandemic-related infusion pump orders placed in the United States with medical necessity certification.
The Medication Management Solutions shortfall also was somewhat counteracted by an 8.4 percent gain in Pharmaceutical Systems sales (to $1.58 billion). Growth was attributed to “continued strength in demand for prefillable products,” according to BD’s annual report.
Last May, BD issued $3 billion in equity to strengthen its balance sheet and reduce its net leverage. “At the same time,” Polen noted to shareholders, “we were also able to make prudent reinvestments into our business to strengthen our core and further advance our long-term growth initiatives, including tuck-in acquisitions.”
BD closed a half-dozen deals in FY20, including:
- Adaptec, a Raleigh, N.C., startup developing an automated urine output measurement solution (Sensica UO). The technology captures hourly urine output measurements and integrates the data into the electronic health record through the BD HealthSight platform.
- LifeBond Ltd., a 14-year-old Israeli company whose main product aims to minimize post-operative complications such as staple-line leakage in GI and bariatric surgeries.
- NAT Diagnostics, an early-stage, privately held molecular diagnostics firm focused on rapid point-of-care testing. The NAT Dx isothermal technology will be further developed by BD, with the intent to offer customers decentralized molecular testing options in early 2023. “...we are very excited about the technology and our point-of-care diagnostics business more broadly,” Polen told industry analysts earlier this year, “and how this adds in a molecular capability to that.”
- Straub Medical, a privately held firm that markets mechanical atherectomy and thrombectomy devices for peripheral arterial disease treatment. The acquisition expands BD’s portfolio of PAD and Venous Solutions within its Interventional segment.