Germany’s Bayer (BAYRY) recently announced that it has purchased the Kirkland, Washington based Pathway Medical Technologies, Inc. Bayer’s subsidiary, MEDRAD, Inc, a leading medical devices maker, bought Pathway for an undisclosed amount. Other terms of the transaction were not revealed.

The acquisition strengthens Bayer’s HealthCare segment which is involved in the research, development, manufacturing and marketing of products for the prevention, diagnosis and treatment of diseases. Bayer has steadily shifted its portfolio towards the HealthCare segment over the last few years. We believe that the takeover of Pathway is another step in that direction.

By acquiring Pathway, Bayer has expanded its presence in the vascular intervention technologies space. The merger will result in a broad portfolio of products to evaluate vascular disease, restore blood flow and confirm the efficacy of the therapies.

We note that Pathway is a leading player in mechanical atherectomy in the vascular intervention market. The products of Pathway restore circulation in peripheral arteries by removing calcified and fibrotic plaque through minimally invasive therapies.  Broadly, the offerings in Pathway’s product portfolio remove blockages in the leg.

The disorder, also known as Peripheral Arterial Disease (PAD), affects approximately 12 million people in the US. The incidence of the disease is on the rise with more than 20 million people in the US expected to be affected by the disease over the next decade.

The PAD portfolio at Bayer will be significantly boosted as a result of this acquisition. The inclusion of the JETSTREAM product will bolster Bayer’s PAD portfolio which already has the AngioJet and Cotavance products. As a result of the PAD portfolio being strengthened, the top line at Bayer is expected to be bolstered further.

Our Recommendation

Currently, we have a Neutral stance on Bayer in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run.

 
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