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C. R. Bard, Inc. (NYSE:BCR)

February 27, 2013 2:15 pm ET

Executives

Todd W. Garner - Vice President of Investor Relations

Timothy M. Ring - Chairman, Chief Executive Officer and Chairman of Executive Committee

Christopher S. Holland - Chief Financial Officer and Senior Vice President

Analysts

Matthew J. Dodds - Citigroup Inc, Research Division

Matthew J. Dodds - Citigroup Inc, Research Division

For those of you in the webcast, it's Matthew Dodds of Citi. And I am very pleased to have back CR Bard. We've got a full crew. We've got Tim Ring, who's the Chairman and CEO. We've got Chris Holland, who is Senior Vice President and Chief Financial Officer; and Todd Garner, who is Vice President of Investor Relations. This is going to be a full on fireside chat, although I think there might a disclosure here we may have to read. So then there's been a big change at Bard in terms of the expectations for the next 3 years. So we'll obviously hit that upfront. But for the audience, I do encourage questions, but I've got along with myself. So thank you for coming. Todd, go ahead.

Todd W. Garner

Yes. We would expect that during our discussion here today, we may be discussing some forward-looking statements, which are subject to risk and uncertainty and could differ materially from actual results.

Our statements will be based on our current expectations, including multi-year projections of revenue, earnings per share and other financial measures, which may also include certain assumptions regarding the timing of final resolution of our patent infringement suit against Gore. Please refer to our cautionary statements and information on risk factors in our most recently filed 10-K, which was last week. Any historical non-GAAP measures presented are reconciled to reported results in the investors -- Investor Relations section of our website. And also, note that all nonhistorical information is given as of today, February 27, 2013, and we undertake no responsibility to update.

And with that, I'll hand it back over to Matt to direct the Q&A.

Question-and-Answer Session

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. Thank you, Todd. So a big obvious question. You made a significant change. You unveiled it in the fourth quarter call. How long have you been considering this because you played really good poker because I don't think any of us saw it coming, how long was the process in deciding you were going to spend more to drive top line again down the road?

Timothy M. Ring

Let me start with that, and then I'll turn it over to Chris. Probably a good year. I think if you go back several years with the benefit of hindsight, and we've always been big believers that innovation, even in the changing kind of market dynamic that we have in the U.S. today, does still win the day. Now you need more things like economic data, et cetera, et cetera, which by the way, also requires more investment to generate that kind of thing. So we always knew that we need to do more of that. What we had the benefit, if you want to call it benefit, of was that the U.S. market was in a prolonged slowdown, maybe forever. And to come to grips with that, whereas in 2008, 2009, we kind of, I think, with everybody else, looked at that as a temporary slowdown, very difficult to dissect as people were trying to understand that. How much of it was health care reform policy? How much of it was macroeconomics? How much of it was just the market changing in and by itself? And we kind of got to the conclusion we don't really care what caused it or why it's the way it is. We just want to grow. And to be able to grow, we've got to invest more, regardless of what it is. Do you still believe in innovation? Yes. Do you still believe in product leadership? Yes, with the caveats of economic data, et cetera, et cetera. A, it all nets out to more investment. So we kind of came to that macro decision a year ago, and then for the last year -- and we've got the benefit of the wildcard of Gore, which makes it maybe a little easier to think about it and set your mind through a little bit to what if you had the money, or what if you could invest more. But it was probably a good year. And you started when?

Christopher S. Holland

9. 9 months ago.

Timothy M. Ring

9 months ago? So you kind of came in when...

Matthew J. Dodds - Citigroup Inc, Research Division

You decided with the forum.

Timothy M. Ring

Well, yes kickstart a little bit. Go ahead.

Christopher S. Holland

Yes. So I think the other -- the practical piece of it is when you're talking about embarking on something of this scale. This is company-wide, right? Everybody's impacted. You're getting everybody on the same page. And you're laying out a vision, a multi-year vision and -- to practically, as it relates to Gore, to get ready to do that and to do all the work to get ready to do that. And then to basically say, "We'll call you in 3 or 6 or 7 or 8 months and tell you to get started." Just as we think, from an execution success standpoint, is the wrong way to approach it. And so as we work through '12, as we finalize the plan and then importantly, got increased visibility around the timing of the final resolution, as well as the certainty, we got comfortable that we were now in a position to lay out both the plan, but also lay out the way we think Gore impacts it at least over this next 24 to 36 months. And so the right strategy for the company and we believe for shareholders longer term also a nicely timed with the point, where we really do think we've got a ability to reasonably estimate the final resolution around the infringement piece so we can really wrap it all altogether, get everybody on the same page in terms of shareholders and you on the sell side. And then we understand. It was obviously not done without a lot of care and thought. But now we fully recognize it's on us to execute it, and that's what we're now focused on doing.

Matthew J. Dodds - Citigroup Inc, Research Division

So it seems to me, when you look at the commentary on the decision, most people believe in 2014 because Gore is partially in there. You'll see a little recovery. It seems like '15, the high earnings growth in '15 is where you have to believe more in the spend delivering, as I don't think there's much from Gore going from '15 into '14. Gore should be in by that time fully.

Timothy M. Ring

You do have Lutonix kicking in, in '15.

Matthew J. Dodds - Citigroup Inc, Research Division

Oh yes, that's part of it. Yes -- I thought you're jumping ahead a bit. So how much -- if you look at the total increase in spend, how much do you roughly think is sales force expansion for emerging markets? How much of it is pure innovation on the R&D side?

Timothy M. Ring

Well, it's about 60% for R&D and 40% for sales force expansions almost exclusively in emerging markets. And the timing of -- the emerging market kicks in faster than the R&D results do.

Matthew J. Dodds - Citigroup Inc, Research Division

Yes. So in terms of how you think about the spend, so what we said is, in 13 and really '14, we're going to spend half of an annual royalty, right? So call it $70 million, right? Rounded. 40% of the dollars going to SG&A investments that really will occur over that 2-year period, which will substantially increase our infrastructure in these fast growing geographies. There's also a part of the spend within the R&D and clinical bucket is accelerating product registrations in those markets. And so when you get to '15, part of what's happening is that this really supercharged emerging markets investment is really kicking in at a time, when the incremental spend, right, has leveled off the new products, the productivity of those additional sales reps are fully enforced. And then the R&D portfolio, which is 60% of the spend, again, includes a range of products with different timelines. But certainly, as we get to '15, those are contributing in a material -- starting to contribute in a material way, again, with the spending, at that point, related to those projects dialed down. And so with the benefit of Lutonix, with the benefit of leveraging Medivance, Neomend and these other investments in the core and emerging markets, we get comfortable with looking at a '15 coming off of a '14, where a lot of the investments already been made, that we can commit to the bottom line growth rates that we talked about.

Matthew J. Dodds - Citigroup Inc, Research Division

So when I look at the R&D, John DeFord has a pretty extensive update every quarter on all the projects. This is all new stuff. This is stuff you have kind of targeted somewhere, but this is not finishing off the stent, fluency stent, next gen product kind of thing. This is all new.

Timothy M. Ring

That's true, but some of it might be a new study for a new indication for a product that we already had, or one that we acquired recently.

Matthew J. Dodds - Citigroup Inc, Research Division

And then you also, Chris, you hit on product registrations. I mean, I've heard more of it at this conference that more countries are requiring product registration. Is that becoming a bigger cost to get into the emerging markets as you're -- are there countries that it's a meaningful amount of money to get mostly your products that work -- that are doing well in the emerging markets in?

Christopher S. Holland

It's more of a timing issue. We can leverage our resources and certainly, we're adding, as part of that investment spend, we're adding additional resources that we'll be able to leverage going forward. But China is sort of a 2-year period to get products registered. And so you've got to be pretty darn thoughtful that you're building a pipeline that's going to be able to feed this marketing infrastructure that you're building. So I'd say it's less the cost. There's certainly some incremental cost, but that is leverage-able. It's more that there are timelines that are not insignificant as you're planning your product portfolio.

Timothy M. Ring

Having said that, we made the decision 3 years ago, maybe, that the investment that was required for that regulatory infrastructure, we made the decision. We were putting that in, and that it requires people, it requires systems. Frankly, it required additional testing for certain products and technologies that you don't need to do for an FDA approval. And most of those technology centers are oriented towards an FDA type of approach. So there's a little bit of a mindset shift that needed to take place there. It's very common nowadays. For example, our regulatory affairs person from China just spent 6 months rotating through our technology centers, getting to know people there, trying to explain to them here's why we need these kind of a thing. So it's not -- it's a lot more than just infrastructure, systems and process. It's that people interaction that's important as well.

Matthew J. Dodds - Citigroup Inc, Research Division

In emerging markets, you've made a ton of progress in the last 3 years in terms of getting that percentage up. Your growth rates, well above companies with larger percentages in emerging markets, and you're now spending this extra amount of money. Do you have a target for what you hope to grow, the emerging market business, through '15? Is that kind of -- has that been fleshed out? I don't remember if it on the call.

Timothy M. Ring

No. No. We don't have a goal in terms -- we came out of fourth quarter '12 with emerging markets representing about 7% of our total sales, 6% for the year. It was 2% 4 years ago. So we didn't, 4 years ago, said, "We want to be 7% in 2012." We expect to maximize the investment, each of the investments has a model in terms of which they're supposed to hit. And we've executed very well against that model, probably better against those models than any other thing that we've done. So we've got a lot of confidence in the capabilities of the team to execute on those investments. So it's -- there's very high expectations for growth, but we don't have a specific target.

Matthew J. Dodds - Citigroup Inc, Research Division

One of your peers, was telling me yesterday that it almost seems like no matter where they put another body in emerging markets, it pays off pretty quickly. Has your experience been -- the returns have been very good, very fast with the actual sales?

Timothy M. Ring

Ours is a lot more challenging.

Matthew J. Dodds - Citigroup Inc, Research Division

It always is.

Timothy M. Ring

It's not. Look, it's not heavy lifting compared to -- an R&D project. It's fairly fundamental. It's getting products registered, as we discussed. It's getting people hired, getting people trained and then getting clinicians trained. And then, hopefully, your technology, to the extent that you win market share in other places, where you have competitive technology. As you know, 80% of our sales, we're #1 and #2. You have all the strength of that kind of market strength that you then take to those markets and hopefully, sustain that market that you've built.

Matthew J. Dodds - Citigroup Inc, Research Division

And then the 40% increase in sales force expansion, would -- should I assume that underlying that, before you add that in, the plan over the next 3 years was still to grow your emerging market sales force and maybe call a little bit, probably in Europe, but maybe the U.S. as well? Is that -- was that shift -- is that shift still underlying that trend?

Timothy M. Ring

Sure. Yes. So to put that in a little perspective for you, if you looked at our SG&A line, as a percentage of sale, it hasn't moved a lot as a percentage over the last few years. Having said that, underneath that, we've probably move $55 million of expense into emerging markets out of the more mature markets. So that underlying shifting of -- an allocation of expense money has been there for several years, will continue to be there. And this is just kind of a top up, if you will, in the tank of being able to add more sales in those markets.

Matthew J. Dodds - Citigroup Inc, Research Division

And is it fair to say Europe is taking a bigger hit than the U.S. in terms of calling?

Timothy M. Ring

No. I wouldn't say that. I mean, the math would tell you it's probably been about the same.

Matthew J. Dodds - Citigroup Inc, Research Division

All right. And then what I'm referring to is a Medtronic question for this conference. In Europe, Medtronic has said, and they were here today. So they got a little clarification on it. They said that they've just had a really slow start for the first 2 months in Europe, surprised them. Finished pretty well last year. Do you see anything structurally different in Europe? You've always been more conservative than most recently, which has been the right way to go. But have -- do you -- I forgot what your view was on Europe leaving 2012. And do you -- are you concerned that it could be tougher this year?

Timothy M. Ring

We -- well, first of all, they I guess end their fiscal year in January?

Matthew J. Dodds - Citigroup Inc, Research Division

Yes, January 31.

Timothy M. Ring

Which is why they can talk about January and we can't. Because we end in December, we don't talk about things mid-quarter. Having said that, if you go back to December and how much a few things change in a month, we went into the last few years basically with an underlying assumption that there was not going to be any significant improvement in those markets, Europe and the U.S. And I think that holds true again. Despite that, we just are coming off a meeting last week of our top 15 managers, and I spent a breakfast meeting with our guy running Greece. He grew his business. And...

Matthew J. Dodds - Citigroup Inc, Research Division

Yes, that's amazing. [indiscernible] Now did you get paid?

Timothy M. Ring

What's that?

Matthew J. Dodds - Citigroup Inc, Research Division

Did you get paid or not paid?

Timothy M. Ring

We are getting paid. And I sat down with him and I said, "It's very interesting because a lot of people in this kind of environment would have a victim mentality of kind of giving up, environment's tough whatever." And I said, "Walk me through how you grew your business." And it was very basic, very fundamental, but very targeted and very specific. And he found a way to grow. So I mean, even in a declining market, you can grow your market share and grow. So yes, things are tough, but we don't allow circumstances to be an excuse.

Matthew J. Dodds - Citigroup Inc, Research Division

You've actually seemed more concerned about the U.S. than Europe in the last -- since last year, in the calls, which has been -- I think has been underappreciated. The Gore royalties. There's I think one key piece left at the Arizona District Court. All we're waiting for now is a ruling on separating the 2 pieces. Is that still where we're at?

Christopher S. Holland

Yes. So there are 3 motions in front of the judge in Arizona. One relates to the willfulness time line really in question, which is what was reminded back to her from the appellate court. One is a motion for the release of funds, and one is a motion for a new trial predicated on the willfulness outcome from Gore. So those are the 3 motions she's had then since the end of January. The timeline we laid out vis-à-vis, our guidance, assume that she'll schedule oral arguments on those. We're waiting for her to do that. And so it's her really ruling on the release of funds and her ruling on the 2 separate, the 2 other motions as well. Again, our strong belief is that, as the appellate court had already very clearly separated the 2 have -- having the Supreme Court now passed on hearing the infringement case, the last thing for her to do vis-à-vis, the infringement, is to release the funds. And so we'll wait for the oral argument date and that will be the next date. And again, the timeline sitting here today is one that again we think reasonably indicates a mid-year resolution on the infringement piece.

Matthew J. Dodds - Citigroup Inc, Research Division

At the oral arguments, is there -- is that -- is there closure that day or does she then go back and make a decision at some point?

Timothy M. Ring

The ruling is typically would follow the oral arguments.

Matthew J. Dodds - Citigroup Inc, Research Division

And is there any precedent on how long that takes?

Timothy M. Ring

There's a range. She could rule that day. She could rule the next day. She could rule the next month.

Christopher S. Holland

They're under no timeline requirements.

Matthew J. Dodds - Citigroup Inc, Research Division

And she could also rule on all 3 parts, 1 part, it's all sort of up to her?

Christopher S. Holland

Right.

Matthew J. Dodds - Citigroup Inc, Research Division

All right. And then shifting over to vascular. I asked this in the call and John Weiland, I think, dismissed me a little bit. But since you're here -- you're a little more bullish than I thought. When you look at your stents and grafts business, it's been a really good driver. There was comments on the call that the market's gotten a little tougher with repricing. There's been a little more price discount. I think the growth is still good. But -- competitively a lot's changing. You've got -- the Cook's zilver stent. I think they have a ramp issue for the first few months this year. They probably won't really get going till later in the year, but they're new. You've got some other companies getting the SFA approval. Do you think -- my question is, do you think that business in the U.S. can grow in 2013, or you think it will be challenged?

Timothy M. Ring

It's competitive market. For sure, more competitive recently with approvals. I think, though, what will happen in that market is, will mirror what happened in the coronary market. Over time, data will become more important, longer-term data, not short-term acute results. And we've got a very good track record with good data that we've built up over time, which presents a very strong clinical case for the use of that product. I think that when you couple that with the Lutonix entry and our play in that space, there's a pretty strong presence there. So I think data, over time, will determine who wins and loses in that space.

Christopher S. Holland

But now '13 is going to be muddy for sure. We've got the first half. We've got very tough comps because J&J was off the market. So '13, it's going to be a little tough to see in the reported numbers, where the share is saddling out. But we like our underlying business.

Matthew J. Dodds - Citigroup Inc, Research Division

And then I'll put Lutonix aside for a minute. In PTA, is there anything you've got cooking that could be a meaningful improvement on your balloons now?

Christopher S. Holland

That was actually one of the things that the 4 -- that we mentioned in our investment plan, is that we do have a new PTA platform coming.

Matthew J. Dodds - Citigroup Inc, Research Division

You talked so fast in the call, I missed it.

Christopher S. Holland

We didn't give much more detail than that, but it is an area of focus for us.

Matthew J. Dodds - Citigroup Inc, Research Division

No timeline at all, not even what it is, but no timeline?

Timothy M. Ring

No. In June, when we have the Investor Day, we'll lay out a much more in-depth product portfolio review for you.

Matthew J. Dodds - Citigroup Inc, Research Division

And then for Lutonix. The international market for drug-coated balloons has been okay. It hasn't been as big. Why do you think the U.S. is going to be a lot bigger? I mean, you've seen it in some other markets, but what are some of the tells for you that suggest it has the $500 million potential down the road?

Timothy M. Ring

Todd?

Todd W. Garner

Well, so the drug-coated balloons have been in Europe for a long time. It's a very crowded space. What's missing is the data. So the patient population in the U.S. is ready for it for sure, and what's missing there is the data. So we think the U.S. data gets access to a -- the only ones -- we still intend to be first in the U.S.. And then we also think it's a catalyst for more growth in Europe.

Timothy M. Ring

And I think the lack of data in Europe has also contributed to an environment, where frankly, reimbursement is not established, they're nonexistent in a number of the key geographies as well. And so we think the LEVANT 2 data is really the catalyst, certainly, to get through FDA in the U.S. but also, to put the Lutonix product in a -- - differential position in Europe as we go forward.

Matthew J. Dodds - Citigroup Inc, Research Division

And when do we think we'll see LEVANT 2, which medical meeting?

Timothy M. Ring

So Q3, we'll be ready. I think John DeFord said on the call just a little caveat on as far as what publication we get into might determine when we could release that publicly.

Matthew J. Dodds - Citigroup Inc, Research Division

Because TCT, I think is later this year.

Timothy M. Ring

Right.

Todd W. Garner

So we think we'll be ready by TCT. It's just a question of whether we have the freedom to talk about it or not.

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. And then, Tim, one for you because we've talked about this business for years. The EP business? You've hung in pretty well. But now you've got a third player, Boston Scientific that's now bought an events navigation system. Do you think that you're going to need that piece to become more competitive? You've got the advanced mapping catheter coming down the road. But now, of the big 4, you're the only one that doesn't have that piece. Do you worry about that? Or do you think you can get by without it?

Timothy M. Ring

Well, I think you need to be a little more creative in the sense that we are a market leader in lab system -- lab recording systems. And there's a lot of different ways, technology wise, to link into those other navigating systems with the technology that we have. So I think we need to explore things like that to take advantage of our market-leading position in that kind of core technology.

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. And then just one broad one. On potential additional deals. You've been more aggressive in the last couple of years. You've taken on some diluted deals. Is -- they've both anything around $0.20. Is there -- do you -- would you go higher than that in terms of dilution? Is there a dilution level that you would pass on, no matter what?

Timothy M. Ring

Well, let me start. I think that, first and foremost, we look at things strategically and determine how important they are relative to the portfolio. Having said that, we are sensitive to the dilution issue. And given the fact that we do now have this kind of Gore wildcard, there's some more flexibility there to trade off what we said we're going to do with that money and/or if a highly dilutive kind of opportunity came in to trade those off one another. So I think we've got our arms around the entire -- all the options available there. We just have to make a determination when and if anything like that came up, how we'd deal with it, [indiscernible].

Christopher S. Holland

Yes. I would just -- I think when it comes to M&A and strategy, I think it's important to never say never to anything. I think that's the right thing to do. Neomend, listen, I hated the dilution associated with Neomend as much as anybody else, but it was, we think, the right investment for the company. I think our job, when you're laying out a strategy, I think it's impossible to have a strategy predicated on M&A, right? Because you can't control it, right? So what we have is -- we think a multi-year strategy we can control. And as we evaluate and bring in additional technologies or products, it's incumbent upon us to say, "Okay, the portfolio we have to drive future growth is one that still makes sense. And are there things that no longer from a return perspective are appropriate or we need to do some trading off." And so what I think everybody can certainly be assured of is that we are sensitive to dilution. We'll factor it in to any decision that we make. But it can't be and should never be, I think, the be all and end all in terms of whether or not you're going to go ahead with something.

Timothy M. Ring

Yes. I wouldn't read into it as a trend. On the 10 years I've been in this job, we've done 75 deals. And normally, in our annual guidance, we actually build in some dilution into that for smaller kinds of tuck-in deals. So all that thinking still holds true. Those I would view as more the exception than the rule. They just kind of happened recently.

Matthew J. Dodds - Citigroup Inc, Research Division

There has been a lot less in the divestiture side. Is that something that you're -- now that you're larger, you've got more technology -- that you're more -- you may be more likely to look at?

Timothy M. Ring

Yes, let me answer that one this way. So it's always easier to divest businesses. So that if you buy something, we've got some R&D people, we've got some salespeople. Now you get to deploy that. We do have some slower growth or even declining product lines. It's always more challenging to divest a product line. And it's more challenging to acquire a product line unless you've got built in synergies and the sales force et cetera to be able to sell that. So that gets a little bit more difficult. Having said that, we do keep a list of things we'd be willing to look at. And I think as your overall growth slows down, we're all about revenue growth. And when you're growing 7%, 8%, 9%, you don't want management time focused on worrying about a little product line here or there that's just not growing. When you slow down, divesting some of those can help your growth rate in a more meaningful way. So I think it's something that we're more attuned to, though not a new thing for us. And it'll be opportunistic as to somebody being out there to acquire product a line or so.

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. And if there's any questions, just raise your hand and I'll grab you. For urology. The I.C. Foley business. I've been surprised at how long it's been under pressure. I think it's mostly U.S. phenomenon. I think last quarter it actually grew internationally. When do you think that trend stops? Because there seems to be more rationale to using an infection control catheter, not less. Clearly, price is an issue. But there has to be a point here where the decline stops. I mean, do you have any visibility in how much -- how much pressure can be left in that business?

Timothy M. Ring

Yes, I'll give you my view. Todd actually came out of that business, and I'll let him comment but...

Matthew J. Dodds - Citigroup Inc, Research Division

I think it's been down since he left.

Timothy M. Ring

You're right. Intuitively, it should be a no-brainer relative to, I mean there was a New England Journal of Medicine article that talked about lowering UTI rates with it. I think, a couple of things. Number one, as reimbursement changes, or penalties kick in for household acquired infections. UTIs are the most common household acquired infections. There was a heightened awareness around that and the causes of that. Clearly, our I.C infection control Foley catheter reduces UTis. However, you take it even lower if you don't put one in at all. So I think there's been a lot more scrutiny in terms of protocol of when a Foley is put in place. I think there have been more protocols put in place where check it after 24 hours, 12 hours and have a doc sign off on it, which is new. And then taking them out earlier is also part of that same protocol. Having said that, when hospitals are slower, they have more time to do all that stuff. When they're busy, they don't have as much time to go after some of that thing -- some of those things. So my own supposition would be potentially when if hospital volumes come back up and they get busy again, some of these other things that are on kind of the periphery or the edge of, really do they save money or not, may not be end of the spotlight the way it is now. But I'll turn it over to you for any more color.

Todd W. Garner

You stole all my good answers, Tim, but I...

Timothy M. Ring

Where do you think I learned them?

Todd W. Garner

I would just tell you that the only other color there, at our high point, the I.C. Foleys made up 51% of our Foleys. So we had...

Matthew J. Dodds - Citigroup Inc, Research Division

Unit or dollars?

Todd W. Garner

Units. And now they're at 45%, between 45% and 46%. So there hasn't been a major shift, but it has bled a little. But of course, we lose a lot in price there because the I.C. Foley is -- we get a decent premium there. So what you're seeing in the dollars has been continued headwinds. The units -- we're not happy with 45%. But it's not like they've fallen off the table. And to Tim's point, volumes are key. When the hospitals fill back up, it's going to be very difficult for the hospitals to maintain these stringent protocols that they've had. And as the patient stays are longer, then it's obviously, you need an IC. You need infection control.

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. And then for other parts of urology, I mean, StatLock. I mean, my sense is that it's kind of matured. This has been I think low single-digit growth rates there [ph] business or is there a potential for innovation there?

Todd W. Garner

We bought that business in 2006 in the low $20 million, I think. We've built it to about a $120 million business. Competition has come in, seen that attractive with much lower price points. So StatLock is a great solution. You think about replacing tape with a $3 device. And you're right, it has flattened out. But really, what's changed over the last couple of years is new competition at a much lower price point. So we continue to believe in that product line. We continue to, obviously, fund that and drive that. But you're right, the double-digit growth days are soon to be past us.

Matthew J. Dodds - Citigroup Inc, Research Division

And then the one business that relatively new, but has been doing well is Medivance. How has the outlook been for that? I'm not sure if actually, anyone asked that in the call. Kind of what the market's doing for temperature management. And then the new -- some of the new products that will kind of be rolling out, have they rolled out yet or are they coming?

Todd W. Garner

Yes. So the new product is the emergent device that -- we have launched that in a controlled fashion. Medivance, we're very excited about the long-term opportunity with Medivance. The key there is new indications. We talked about it at the analyst meeting a year ago, a key myocardial infarction is an excellent app, [ph] we think there's a $200 million market with that. There's traumatic brain injuries, there's stroke, in addition to cardiac arrest and fever management. So we see this as a $1 billion opportunity. We need to unlock some indications to get there that involves some studies and we talked about that on our recent call that, that was part of this investment plan of accelerating those studies to get to those indications. But we very much believe in this platform. It's a great answer for a huge need, and you'll see further investment in that platform.

Matthew J. Dodds - Citigroup Inc, Research Division

When I -- go ahead, Chris.

Christopher S. Holland

We've called out 10% sequential growth on the call as well, so...

Matthew J. Dodds - Citigroup Inc, Research Division

Right. Is that the overall? Because I think you might be gaining share. Do you think the overall market here is growing at a pretty healthy clip?

Timothy M. Ring

I think part of it is you really got to create the market. So we and the other competitors are out there trying to do that, because there are much cheaper alternatives, blankets and the like, that are not anywhere remotely clinically comparable. But in a difficult economic environment, when you've got to make the sell there's a capital equipment piece that is always challenging. And so I think we're -- our growth rates, I think, we're certainly maintaining if not gaining share. But I think as the market grows, we're the ones making it grow. And I think our growth rates are probably reflective of that.

Matthew J. Dodds - Citigroup Inc, Research Division

And actually, last year, at the analyst meeting, I was snooping around the Medivance crew. One thing they noted was that the other, we'll call it advanced temperature management companies, businesses, had a very strong business actually in Europe, and then Medivance is mostly a U.S. business. Have you put much new infrastructure in place to go after that opportunity?

Timothy M. Ring

Not a ton of infrastructure, but what we have done now, I think, completed across the board. They were with distributors. And we've basically taken the distributors out. So we're direct now, certainly, in Europe and it's actually doing well in Japan. So with the bigger footprint that we have, we're able to take that and get to more places faster with that. But it's the same kind of the sell that Chris outlined terms of getting the data and the education and the knowledge and the awareness out there is still the same in Europe.

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. And then on surgery. A couple of businesses have slowed the biologic and the fixation. Is there, and again, if this is coming in the June announcement, I don't want to get ahead of it. But are there innovations that you can possibly do there that could turn that business around from a share perspective?

Todd W. Garner

Sure. I think there's a lot of innovation there. In fact, understanding Biologics and how they act as a medical device in the body, I think is still pretty embryonic, from a science point of view. The degree at which cross-linking is -- of tissue is required and what segments of the body does that work better than others is still very embryonic in terms of understanding that. I think being able to link tissue with various coatings and then even active agents beyond that is also kind of an interesting opportunity. Moving forward, I think there's still refinements in even the manufacturing process in thicknesses and things that will aid in the quickness of the absorption into the body. So still something that's in very early innings in terms of understanding that. So I think there's a lot of innovation there yet to come. It may be as early as anything we're in terms of the awareness of understanding the science.

Timothy M. Ring

And on fixation quickly, Matt, we are excited about a new platform in fixation. And hopefully, we'll be in a position in June to talk more about that.

Matthew J. Dodds - Citigroup Inc, Research Division

Okay. So we got 2 minutes left. I think we might have started right because everyone's starting to crowd us out. So we'll wrap there. Tim, Chris, Todd, thank you very much.

Todd W. Garner

Thanks, Matt. We appreciate it.

Christopher S. Holland

Great to see you.

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