Coloplast's Impressive Track Record for Innovation Adds Up to a Narrow Moat

Based in Denmark, Coloplast is a leader in global ostomy and continence care. The firm has made inroads into the concentrated urology and fragmented wound-care markets, but it remains a peripheral player there. We think Coloplast has dug itself a narrow moat thanks to consistent innovation in ostomy and continence care that has led to a dominant position in Europe. Since 2008, the firm has done an admirable job of trimming its cost structure as it focused on profitable growth. As a result of shifting the majority of its production to Hungary and China, Coloplast now enjoys a gross margin that beats that of rival ConvaTec by 1,600 basis points. Currently, Coloplast is altering its emphasis to enhance growth by entering new geographies,with an emphasis on the U.S.