Becton Dickinson: Riding the Biotech Boom

Analysts are starting to pile into the biotech bandwagon now. And for good reason: the AMEX Biotech Index is actually lower today than it was nine years ago. Translated into investor-speak, the opportunities in biotech today are fantastic. I’m not a biotech guy, but my fellow analyst Marc Lichtenfeld is, and he writes about them regularly.

Now that Investment U and our sister publication – Smart Profits – are combining forces, you’ll be hearing about the biotech sector from Marc on a regular basis. Nevertheless, there is something that I do know about the healthcare and biotech sector.

All biotech companies, regardless of whether or not they turn out to be a good investment, need laboratory services and equipment. Therefore, it stands to reason that any boom in the biotech sector would drag along these companies for the ride.

Becton Dickinson and Company (NYSE: BDX) Is a large-cap medical technology company, and one that stands to benefit from the biotech boom.

The company sells an extensive range of medical supplies and devices. It also has an extensive array of laboratory equipment and diagnostic products used by life science researchers (biotechs), healthcare institutions (hospitals and doctor’s offices), clinical laboratories and the public.

Let’s take a quick look at each division:

The BD Medical division manufactures a complete line of medical devices and other items used in just about every facet of the typical healthcare setting. Needles, catheters, syringes, scalpels and home healthcare products are just a few of the thousands of products offered by BD Medical.

The BD Diagnostics division is similarly broad.

It provides for the safe transport and collection of specimens and instruments associated with a wide range of infectious diseases. The next time you are in your doctor’s office, take notice of the “sharps” collection device mounted on the wall. Chances are it’s a BD box put there and serviced by BD Diagnostics.

The division services microbiology laboratories, physician’s offices, home patients, laboratories and clinics, biotech labs, and hospitals.

BD BioSciences manufactures tools focused squarely on the research and clinical segments of biotechnology. Its tools enable the study of cells and their components. Its products also include state-of-the-art cell imaging systems, cell culture media, reagent systems for life sciences research and other diagnostic tools.

BD Biosciences’ tools directly impacts drug discovery and development.

Moreover, any increases in biotech R&D bode well for Beckman. And as the government strives to drive down the cost of healthcare, diagnostic tests that take the place of expensive MRIs and CT Scans are on the increase.

Investors that want some exposure to the biotech space, would do well to consider a company that benefit regardless of the success or failure of any given biotech company.

Disclosure: No positions

Comments

[Ryan Savitz:]

David,

Great article. I have written a few myself on BDX and have held it for over a year. Great trade playing off the expansion of biotech. Another strong area for growth I feel is in Obama's Healthcare plans to reduce healthcare expenses. Although, Becton's systems and products are extremely expensive and cut into hospital CAPEX, they are essential monitoring devices that will cut down on extra tests that doctors might advise for patients. BDX is able to monitor and provide information on many illnesses at once in a more effective and efficient manner than many other competing devices out in the markets today.

Jul 01 08:48 AM