ConvaTec winds its way around wicked wounds. The company makes wound cleansers, dressings, bandages, wound hydration products, and a negative pressure wound therapy system. Its products are designed to foster the management and healing of wounds and address such issues as wound dryness and severity. ConvaTec's additional products include ostomy pouching systems, which allow patients with artificial openings (or stomas) to dispose of bodily waste into attachable pouches. The company also makes lines of continence, critical care, and infusion products. ConvaTec, which manufactures its products in Europe and the US and distributes worldwide, is owned by private equity firms Nordic Capital and Avista Capital Partners.
ConvaTec has operations in 35 countries, including a dozen manufacturing and warehouse facilities in nine countries (Belarus, Denmark, Dominican Republic, Malaysia, Mexico, Slovakia, the UK, and the US), while its products are sold in more than 100 countries. The company's largest geographic segment is EMEA (Europe, Middle East, and Africa), accounting for 37% of revenues in 2011.
Ostomy and wound care are the company's largest segments, respectively accounting for 39% and 32% of sales in 2011. In addition to its Esteem and Natura-branded ostomy pouching systems, the ostomy division makes and sells accessories and skin care products including skin barrier strips and adhesive removal wipes. The wound care division is focused on advanced, moist wound healing materials such as hydrocolloid, hydrofiber, and antimicrobial dressings; such products are sold under brands including AQUACEL and DuoDERM.
Through its smaller infusion and industrial sales division (part of the Unomedical subsidiary), the firm makes infusion systems that are primarily sold to insulin pump manufacturers; the unit also sells single-use medical supplies to original equipment manufacturers. Meanwhile, Unomedical's continence and critical care division makes fecal management and urinary continence systems, as well as patient monitors, sterile single-use catheters, wound drainage systems, and airway management devices.
Sales and Marketing
ConvaTec employs direct sales forces, which market its wares to wholesale distributors, delivery providers, and health care facilities in the US, Germany, France, Spain, and the UK. The company's products are marketed in other countries through third-party representatives.
ConvaTec has about 30 owned or managed warehouse location, as well as 30 external distribution centers in small country markets. In the UK and the US, the company distributes certain medical supplies directly to consumers through its Amcare and 180 Medical home delivery service units.
ConvaTec reported a 6% increase in revenues in 2011 to some $1.6 billion due to organic growth in key geographies (including the US, the UK, and Japan) as well as sales of new products acquired in 2011 and increased direct sales activities. The wound therapeutics segment increased by 4% on sales of hydrofiber products (in addition to geographic growth), and the infusion segment increased 3% due to increased customer demand for infusion pump components. The continence and critical care division declined 1% due to the sale of its custom procedure pack product line in 2010.
ConvaTec reported losses in both 2010 and 2011, though results were less severe in 2011 due to increase revenues and lower administrative, R&D, and general expenses from restructuring measures.
ConvaTec grows its business through new product development and ongoing research to support the use of its existing products. The company has annual R&D expenses between $45 million and $55 million. It also acquires and licenses technologies from other companies.
The company also works to retain and grow its business through customer relationship management, brand expansion into new markets, and marketing programs geared towards high-growth markets. ConvaTec hopes to also increase sales to industrial customers, who use the company's products as components within their own products.
To balance its expansion measures, the company occasionally divests assets. In 2012, for instance, its Unomedical unit sold its electrodes product line to Denmark-based device maker Ambu. In addition, ConvaTec is working to control expenses by rationalizing its manufacturing and distribution facilities and by streamlining procurement and other operational processes.
Mergers and Acquisitions
ConvaTec makes a regular stream of small acquisitions to expand its product and service offerings, as well as its geographic presence. In 2012 the company acquired AbViser medical, adding to its critical care offerings with an abdominal pressure monitoring system. It also purchased Trio Healthcare, a UK maker of ostomy devices, and 180 Medical, a US ostomy supply firm. The purchase of 180 medical established ConvaTec's presence in the US home delivery market. – less