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Becton Dickinson Spinoff Embecta Is a Stock to Watch

The newly public company has a long history in the diabetes space

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Apr 07, 2022
Summary
  • Embecta plans to boost R&D spending and seek partnerships.
  • It is working on a patch pump for type 2 diabetes patients.
  • Company launched with sales of $1.2 billion.
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Embecta Corp. (

EMBC, Financial) may be new to the public markets, but it is well-established in the diabetes field and now free from the control of Becton, Dickinson and Co. (BDX, Financial) to implement its ambitious growth plans.

Spun off from BD on April 1 as a standalone public company, Embecta has nearly a century of experience in the diabetes space.

Former Worldwide President of BD Diabetes Care and new Embecta CEO Devdatt Kurdikar told Drug Delivery Business News that while insulin has been used to treat the disease since 1922, just two years later BD introduced the first specialized syringe for the delivery of insulin and has been making injection devices ever since.

In the week it became public, Embecta has traded as high as $49, but has since retreated to $29.40. The stock may be a bargain if the company can turn opportunity into reality.

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One product it’s banking on is an insulin patch pump system for people with type 2 diabetes, which is often milder than type 1 but can still cause major health problems.

Drug Delivery reported the company’s patch pump has a breakthrough device designation, and Kurdikar said it’s been helpful to work hand-in-hand with the Food and Drug Administration to understand regulatory requirements during the product's development and sync the company’s understanding with that of the FDA. Kurdikar also said the device could offer the opportunity for mergers and acquisitions as well as partnerships.

Embecta has a lot going for it from the jump, including about $1.2 billion in annual sales, broad geographic coverage and a variety of diabetes offerings.

Chief Financial Officer Jake Elguicze noted the company starts with financial flexibility with a combination of payable debt and fixed-rate capital that is termed out, meaning the company can avoid near-term maturities while maintaining the ability to pay down debt if it chooses.

Embecta plans to make necessary investments, boost research and development and create a company capable of driving sustainable, increased constant currency revenue growth rates, Elguicze said. He added that plans call for R&D investment to go from the current level of around 4% to 5% of revenue to at least 7%.

Kurdikar acknowledges, however, that sales growth will be “flattish” through the group’s fiscal 2024, but at least the company is profitable and generates cash, reported pharmacy consulting group Evaluate.

No question diabetes devices is an attractive space, as witnessed by the number of companies in the mix, including DexCom Inc. (

DXCM, Financial), Insulet Corp. (PODD, Financial), privately-held Bigfoot Biomedical, Senseonics Holdings Inc. (SENS, Financial) and Tandem Diabetes Care Inc. (TNDM, Financial).

Embecta will be headquartered in New Jersey in its own facility.

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