Covidien (NYSE:COV) has been rather active of late. Follow this bear case scenario as you watch the action. Regulatory environment is changing in the U.S. Device firms will see an increase in R&D costs attributable to increasingly stringent approval requirements. Co-op purchasing organizations are becoming increasingly price powerful. More clients keep joining to reduce costs. Covidien’s soft tissue business struggles when competing against J&J’s entry into the market. The endomechanical business now has commoditised trocars product line facing stiff competition from Applied Medical.
George Gutowski writes from a caveat emptor perspective