Devices & Diagnostics, Hospitals

Vascular Solutions’ $3M purchase of discontinued St. Jude Medical product is a “true tuck-in” acquistion

Vascular Solutions (NASDAQ: VASC) believes that it can make a real business out of a product […]

Vascular Solutions (NASDAQ: VASC) believes that it can make a real business out of a product line that St. Jude Medical (NYSE:STJ) discontinued in July 2011.

On Friday, the Maple Grove, Minnesota company, announced that it was buying St. Jude Medical’s Venture catheter product for $3 million, paying $2.25 million upfront and $750,000 to be paid after the manufacturing operations are successfully transferred. (The price also includes a small inventory that was left over once St. Jude Medical stopped manufacturing the product)

On Monday, vice president Phil Nalbone of Vascular Solutions described the transaction as a “true tuck-in acquisition” that fits perfectly with the company’s goal of providing solutions for vascular procedures. Vascular Solutions manufactures more than  60 products in three categories: catheter products, hemostat products and vein products, including the GuideLiner and SuperCross catheters for complex procedures.

Nalbone acknowledged that the product – called Venture Catheter – is used sparingly. That’s because it is a catheter used to provide control to the guidewire in interventional procedures that are complex because of difficult anatomy, among other reasons. Nalbone described six procedures where the deflectable-tip Venture catheter has been used successfully, including in “extremely tortuous, twisted anatomy … where there are multiple bends through the length of the arteries that requires continually shaping the guidewire as you go.” He estimated its use to be in the single digit in terms of overall of overall  interventional coronary and peripheral vascular procedures.

But it’s a product that doctors highly value because it has no competitor. St. Jude acquired the product through its purchase of  a Twin Cities company called Velocimed in 2005, Nalbone said.

That is what St. Jude learned too once it halted production.

” In mid-2011, we made the decision to discontinue selling the Venture catheter.  Since that time, we have heard from a number of our customers that it is important to them that this product remains available for purchase.  Based on this feedback, we worked to find a company that we believe will manufacture and support this unique product,” said St. Jude spokeswoman Amy Jo Meyer in an e-mail.

Nalbone added that in the three years before St. Jude Medical discontinued making the Venture catheter, its sales were around $3 million annually and that is what Vascular Solutions expects it to add to the top line once the product is relaunched.

But that won’t happen until the second quarter of 2013.

[Photo Credit: Freedigitalphotos.net]

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