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Sales grew 8% y/y (9% ex-currency) in 2016 to $1.012 billion driven by further adoption of peripherally inserted central catheters (“PICCs”), which continue to see impressive improvements in adoption rates internationally as physicians become much more comfortable with PICC placements. Unlike a traditional central catheter, PICCs are inserted more tips here through the arm and have a lower risk profile. International PICC sales drove a whopping 17% growth rate in international sales in the segment in 2016, and I think the business can effectively grow double digits as physicians globally replace traditional central lines with PICCs. This sort of drug administration product can fit in perfectly with BD’s existing contracting strategy. The balance of Bard’s sales comes from its urology segment ($952M) and its surgical specialties segment ($637M). Admittedly, I am the original source less familiar with the urology business, but the business grew 13% y/y (14% ex-currency) in 2016 and its catheter stabilization products are highly complementary to the vascular business from a manufacturing perspective. The segment includes specialty urological products augmented by more basic urology drainage products as well as fecal and urinary continence products. While a bit more commoditized, sales in the segment grew nicely in Q1, up 10% y/y. Surgical specialties are probably the least complementary of CR Bard’s businesses, with key products throughout the operating room like hernia repair products, hemostats, and sealants. While not necessarily a product line that can be leveraged with either the legacy BD or Bard businesses, I suspect the line of mostly physician preferred products carries robust margins and provides some exposure to another fast-growing segment.
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