The Medicines Company (MDCO), Merck & Co., Inc. (MRK), Baxter International Inc. (BAX): Three Reasons to Like This Critical Care Company

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The Medicines Company (NASDAQ:MDCO) is a mid-cap value stock that jumped by 21% in the last 12 months, trading at a 52-week price range of $20.04-$37.40. This is backed by strong performance and significant sales growth in marketed products such as anticoagulants. Essentially, the company provides medical solutions for the treatment of critical care patients in hospitals. I consider this an investment-grade company based on the following factors:

Solid portfolio with wide range of products and product candidates

Opportunity in highly competitive critical care and anticoagulant markets

Sales growth driving positive performance

The Medicines Company

Diversified portfolio
The company has three marketed products and five in different development stages. Importantly, all of them are focused on critical care therapeutics, which creates technology depth for the company. The marketed products in the U.S. include Angiomax, Cleviprex, and Argatroban.

: Angiomax injection, an anticoagulant agent, is used to prevent the formation of blood clots that lead to heart attack or stroke.

: Used as an anticoagulant in adult patients.

: Indicated for the reduction of blood pressure when oral therapy is not feasible.

Moreover, the pipeline includes a variety of product candidates. Of them, three products — cangrelor, oritavancin and MDCO-157 — are in advanced stages, and two — MDCO-2010 and MDCO-216 — are in early stages of development. The company also has a portfolio of generic products used for acute care. In addition, it co-partners with AstraZeneca to market the oral antiplatelet drug Brilinta in the U.S. and with Bristol-Myers Squibb for Recothrom in the global market. Recothrom is a surgical hemostat that is applied topically during surgery to stop bleeding.

Opportunity in anticoagulant and critical care therapeutics markets
More than 5 million patients are admitted to American intensive care units annually, primarily for critical medical conditions including respiratory failure, postoperative management, stroke and heart failure. Increasingly, infants and the older population are getting admitted. According to GBI Research estimates, the overall critical care therapeutics market value is expected to grow at a compounded annual growth rate of 5% to reach $3.2 billion in 2019. The growth is largely driven by increasing demand of existing products, and approval and launches of new products.

The anticoagulant therapies market is large, and competition is very intense due to the incidence and severity of cardiovascular diseases. There are a number of anticoagulant therapies currently available in the market. New products such as oral anticoagulants are also in many pipelines. MarketResearch also estimates that the U.S. anticoagulants market will grow from $7.06 billion in 2012 to $15.32 billion in 2019. The Medicines Company (NASDAQ:MDCO) focuses mostly on the U.S. market and generates more than 90% of revenues from the U.S. Assuming even a 2% market share for its candidate product Angiomax, market opportunity for the company in the anticoagulant market will be around $170-$200 million by 2015.

Position among peers
Angiomax competes primarily with Eli Lilly’s ReoPro and Integrilin from Merck & Co., Inc. (NYSE:MRK). Integrilin is a platelet aggregation inhibitor indicated for the treatment of acute coronary syndrome and percutaneous coronary intervention. The product is losing its sales quarterly, possibly due to advent of new drugs and generic products. It is expected to decrease further in coming quarters. In the second quarter of 2013, Merck & Co., Inc. (NYSE:MRK)’s sales were down by 7% to $11 billion, and adjusted net income also decreased by 24% to $2.5 billion, or $0.84 per share, compared to same period last year. I suspect that this trend will continue for the next quarter.

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