Health News

Tyco spin-off eyes medical device deals

CHICAGO (Reuters) - Covidien Ltd. COV.N, the former Tyco unit, on Monday said it expects a focus on medical technology, including small acquisitions, to help push revenue growth into the mid-single digits in the next few years.

“It will continue to be the largest segment of our business and receive the majority of our investment,” Richard Meelia, president and chief executive of Covidien, said in an interview.

Covidien, along with former parent Tyco International Ltd. TYC.N and the new Tyco Electronics TEL.N, began trading as separate entities on Monday. As a Tyco unit, the $10 billion health care business, which makes surgical instruments, ventilators and syringes, struggled with sluggish revenue growth and declining profitability due to underinvestment.

It is now investing aggressively in research and development in its core devices business and would consider acquisitions in the $60 million to $250 million range, Meelia said, as it looks to expand its offerings of surgical, respiratory and energy-based devices.

It expects ultimately to boost R&D spending in devices to 5 percent to 6 percent of sales from 2.7 percent today, Meelia said.

Shares of Covidien, which also has pharmaceutical, imaging, retail and medical supply businesses, closed up 31 cents, or 0.72 percent, at $43.41 on the New York Stock Exchange.