INSIDE THE WORLD OF BUSINESS

Creganna acquisition signals bright year in life sciences

The Department of Finance will publish the full-year Exchequer returns today, showing the state of the country’s finances at the end of 2009.

Elsewhere, building materials giant CRH will publish a trading statement.

Amid the gloom of recession, medical devices and the broader life sciences sector were among the very few bright spots in the Irish economy last year. And, to judge by Creganna’s announcement yesterday, the sector is anticipating another strong performance in 2010.

The Galway-based company, which designs and makes equipment used in minimally-invasive surgery, has acquired the Avalon Medical Services/Tactx Medical business from Indian packaging giant Essel Propack, in a move it forecasts will add 50 per cent to its revenues this year. That propels the Irish firm into the big league among outsourced suppliers to medical device businesses and certainly makes it the dominant indigenous player in the medical devices sector.

The first major M&A announcement of the new year, it seems almost a declaration of intent to deliver on the knowledge economy.

The acquisition delivers on several levels. In a market where outsourcing is increasingly in demand among the global players, the complementary strengths of Creganna and Tactx in differing elements of high-end catheter design allow the enlarged company to present itself as a more effective outsourcing partner for companies in the $210 billion (€146 billion) global medical devices industry.

In addition, the geographic footprint of the businesses overlaps neatly. Creganna’s manufacturing plans in Galway and Massachusetts will dovetail neatly with Tactx’s California, Minnesota and Singapore operations to ensure a manufacturing presence in all the major clusters of medical device firms worldwide. Singapore will also be a useful staging point for what is expected to be a fast-growing Asian market for the medical device sector in future years.

However, it is clear from the decision to change the company’s name to Creganna Tactx Medical, that the company intends to capitalise on Tactx’s greater brand recognition in the key US market.

Despite the global reach of the enlarged business, Ireland remains a key component, accounting for 510 of the 820 staff employed across the group. That could present issues for the business down the line and cost competitiveness will be crucial.

Outsourced design and manufacture is a $6 billion a year business across the full spectrum of medical devices, and one that is projected to grow by 15 per cent per annum. Creganna’s recent performance – it has increased sales by two-thirds in just three years, albeit including acquisitions – is well ahead of that. That rapid growth leaves it well-placed in what remains a very fragmented market.

Optimism in Waterford

SUGGESTIONS THAT at least one international buyer could be interested in the former Waterford Crystal site mean there are grounds for hoping that industry can be revived in the city.

The 38-acre site is zoned for industry/opportunity, and presumably whoever buys it will have something along these lines in mind.

Whether or not crystal manufacturing restarts there is another matter. KPS, which bought most of Waterford Wedgwood’s assets last year, indicated that it would be willing to buy crystal manufactured in the city and sell it under the brand name, if production were to restart.

At the time, a group of local business people and the unions hoped that crystal manufacturing could be revived, but it now looks likely that the site – and its all-important furnace – will be sold.

There were 708 people working at the plant when David Carson of Deloitte took over as receiver a year ago today. Many of them were employed in traditional crystal manufacturing, and have lost their jobs.

Just what a new purchaser for the site will mean for them is uncertain. It will depend on what that buyer ultimately intends to do and on the skills that the organisation will need.

TODAY: 

The Department of Finance will publish the full-year Exchequer returns today, showing the state of
the country's finances at the end of 2009. Elsewhere, building materials giant CRH will publish

ONLINE:

For regular commentary on business and economic issues visit our blog, Current Account, at www.irishtimes.com/blogs/business

Twitter users can receive links to the latest business news and blog posts by following us at twitter.com/irishTimesBiz