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Becton, Dickinson and Company Message Board

  • jdladvisor jdladvisor Oct 13, 2009 3:47 PM Flag

    Health Care Reform pressures consolidation

    Anyone think that we will see consolidation if health care reform is passed?

    Could ABT, COV, BAX, JNJ pick off BDX for growth?


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    • I can see where BDX has nothing but positive ramifications with 47 million new people added to the healthcare system. Core products like syringes, blood collection products and others have no real competition from the players you have listed.

      • 1 Reply to nutmegman58
      • It's not competition BD will have to worry about. Consolidation and reform are the bigger problems for BD.

        The 47M people that you mention joining the healthcare system didn't just appear. They've been here all along, and consumed their share of BD's syringes, blood collection tubes you mention just like the rest of us. The difference is they just didn't pay for it.

        BD still gets paid whether the patient pays or not. The hospital recoups it's loss by passing this loss along as higher prices on disposables consumed by patients that do pay. And the higher the volume of the disposables used to pass along the cost, the more it can be spread out and noticed less.

        This eventually created a tolerable 'over consumption' of these routine disposables as the markup eventually grew to 4x the true purchase cost for the item making them essentially "profit" vehicles for these healthcare providers.

        "Reform" would mean charging only the true cost of the item to each patient and using the minimum necessary (Consolidation). Hypothetically, if the US were to consume medical disposables at the same proportion as the rest of the world, then US sales would only be 4% of the total sales. Companies like BD are on an artificial high currently because it is obviously not. It's tough to guess what it really should be but I'd quit thinking in terms of "growth" for BD.

    • JNJ is slightly a better buy than BDX at this time. Look at the earnings yield plus dividend and you pick up more with JNJ than with BDX.

      Better growth with BDX however.

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