07.27.09
$3.6 Billion
KEY EXECUTIVES:
Christopher B. Begley, Chairman and CEO
Terrence C. Kearney, COO
Sumant Ramachandra, M.D., Ph.D., Sr. VP, and Chief Scientific
Officer
Thomas E. Werner, Sr. VP, Finance, and CFO
NO. OF EMPLOYEES: 14,500
GLOBAL HEADQUARTERS: Lake Forest, Ill.
The name Hospira is derived from the words hospital, spirit, inspire and the Latin word spero, which means hope. When Hospira was spun off from Abbott Laboratories six years ago, its hope was to create and grow an independent medical technology company. Since then, the company has reshaped itself through acquisition and new product development, resulting in sales growth, particularly over the last two fiscal years.
Hospira’s product portfolio includes generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems. The company’s products are used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities. Many of the company’s pharmaceutical products also incorporate a device component, such as pre-filled syringes and intravenous products.
For fiscal 2008 (ended Dec. 31), net sales increased 5.6 percent to $3.6 billion compared with $3.4 billion. According to the company, the increase primarily was the result of the impact of new group purchasing organization (GPO) contracts awards (in August 2008 the company announced new national agreements with Premier Purchasing Partners, providing the GPO’s 2,000 member hospitals with access to special pricing and terms for infusion devices, related sets and disposables, along with intravenous solutions, nutritionals, drug-delivery and gravity administration sets); strong demand for the company’s medication management system product lines; and favorable foreign currency translation.
Operating income increased 11.6 percent to $647 million for 2008, compared with $580 million for fiscal 2007, which management attributed to improved manufacturing efficiencies and the impact of foreign exchange. Net income rose to $320 million from $137 million.
On the purely device side, the company’s revenues from the sale of medical management systems and other devices was $1.1 billion for 2008, up slightly from approximately $1 billion in 2007. The company’s specialty injectables business earned $1.8 billion for FY08 compared to $1.7 billion in 2007.
“Hospira delivered another positive year of performance in 2008, generating solid revenue and strong profit growth, further advancing key areas of our business … ,” Christopher B. Begley, chairman and CEO, said of his company’s performance. “Looking forward, as a diversified healthcare company primarily serving the acute-care market, Hospira is well positioned in 2009.”
For 2008 and 2009, some of the company’s aforementioned manufacturing efficiencies include restructuring of production sites.
The company phased out production at its facility in North Chicago, Ill. It also plans to exit manufacturing operations at its Morgan Hill, Calif., plant over the next year. Production of the primary products at these facilities is expected to move to other Hospira facilities and/or be outsourced to third-party suppliers. In 2008, Hospira began an approximately $20 million expansion of manufacturing capacity at its LaAurora, Costa Rica, facility, in part to accommodate some of the production being transferred from other company facilities.
Early this year, the company introduced “Project Fuel,” a multi-phased initiative to improve the company’s margins and fuel its growth. The plan is designed to capitalize on the company’s potential to increase shareholder value and improve operational efficiency by optimizing its product line, evaluating non-strategic assets and streamlining its organizational structure. In the next two years, Hospira expects to reduce its global work force by approximately 10 percent (in the next 12 months) and deliver annual cost savings of approximately $110 million to $140 million. The company will continue to look for manufacturing efficiencies and cut down on overlapping production and management operations.
“Every day our employees make valuable contributions to Hospira, our customers and the patients we collectively serve,” said Begley. “We understand the impact these decisions have on our employees and their families, especially during tough economic times. Our actions, while difficult, are designed to benefit all of our stakeholders by ensuring a strong foundation for our future.”
The company also has made strategic hires recently. In June last year, Sumant Ramachandra, M.D., Ph.D., was hired as president and chief scientific officer. He will be responsible for Hospira’s global research and development (R&D) and medical affairs organization. Ramachandra succeeded Edward Ogunro, Ph.D., who retired at the end of 2007. Most recently, Ramachandra served as vice president and senior project leader, Global Development, Schering-Plough Research Institute in Kenilworth, N.J. This past April, the company hired Brian Meadows as corporate vice president, Supply Chain. He will be responsible for demand and supply planning; strategic sourcing and supplier management; procurement; materials and production planning; transportation management and distribution operations. Most recently, Meadows was senior vice president of supply chain management at Sprint-Nextel Corporation.
Though the company may be restructuring its manufacturing footprint, that doesn’t mean it also hasn’t been in acquisition mode.
In April of last year, Hospira purchased Sculptor Developmental Technologies, which developed VeriScan Rx, a software application that supports barcode medication administration at the point of care. It is designed to streamline the medication administration process to enhance patient safety and clinician workflow. Financial details were not disclosed. In October, the company made another purchase—the EndoTool business from MD Scientific LLC. The EndoTool glucose management system is cleared by the U.S. Food and Drug Administration to establish and maintain glycemic control in acute, critical care and operating room settings by calculating the dose of intravenous insulin needed to effectively control blood glucose levels. Traditionally, nurses and other clinicians use paper-based protocols to manually monitor and adjust I.V. insulin dosing. EndoTool runs on a hospital’s existing computer system and can interface with a hospital information system. As part of the agreement, Hospira acquired additional assets related to the EndoTool business, including the MD Scientific headquarters in Charlotte, N.C., and the employees supporting the product. Financial details of the agreement were not disclosed.
On the divestiture side, in early July this year, San Clemente, Calif.-based ICU Medical, a manufacturer of medical connectors, custom medical products and critical care devices, purchased Hospira’s critical care product line for approximately $35 million in cash. The acquisition is expected to close during the third quarter of 2009. Hospira’s Begley said the sale would allow his firm to focus on “core strategic areas of specialty injectable pharmaceuticals and medication management systems, driving innovation and growth in these key businesses.” In 2005, Hospira and ICU Medical entered into a strategic manufacturing, commercialization and development agreement for Hospira’s critical care product line.
KEY EXECUTIVES:
Christopher B. Begley, Chairman and CEO
Terrence C. Kearney, COO
Sumant Ramachandra, M.D., Ph.D., Sr. VP, and Chief Scientific
Officer
Thomas E. Werner, Sr. VP, Finance, and CFO
NO. OF EMPLOYEES: 14,500
GLOBAL HEADQUARTERS: Lake Forest, Ill.
The name Hospira is derived from the words hospital, spirit, inspire and the Latin word spero, which means hope. When Hospira was spun off from Abbott Laboratories six years ago, its hope was to create and grow an independent medical technology company. Since then, the company has reshaped itself through acquisition and new product development, resulting in sales growth, particularly over the last two fiscal years.
Hospira’s product portfolio includes generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems. The company’s products are used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities. Many of the company’s pharmaceutical products also incorporate a device component, such as pre-filled syringes and intravenous products.
For fiscal 2008 (ended Dec. 31), net sales increased 5.6 percent to $3.6 billion compared with $3.4 billion. According to the company, the increase primarily was the result of the impact of new group purchasing organization (GPO) contracts awards (in August 2008 the company announced new national agreements with Premier Purchasing Partners, providing the GPO’s 2,000 member hospitals with access to special pricing and terms for infusion devices, related sets and disposables, along with intravenous solutions, nutritionals, drug-delivery and gravity administration sets); strong demand for the company’s medication management system product lines; and favorable foreign currency translation.
Operating income increased 11.6 percent to $647 million for 2008, compared with $580 million for fiscal 2007, which management attributed to improved manufacturing efficiencies and the impact of foreign exchange. Net income rose to $320 million from $137 million.
On the purely device side, the company’s revenues from the sale of medical management systems and other devices was $1.1 billion for 2008, up slightly from approximately $1 billion in 2007. The company’s specialty injectables business earned $1.8 billion for FY08 compared to $1.7 billion in 2007.
“Hospira delivered another positive year of performance in 2008, generating solid revenue and strong profit growth, further advancing key areas of our business … ,” Christopher B. Begley, chairman and CEO, said of his company’s performance. “Looking forward, as a diversified healthcare company primarily serving the acute-care market, Hospira is well positioned in 2009.”
For 2008 and 2009, some of the company’s aforementioned manufacturing efficiencies include restructuring of production sites.
The company phased out production at its facility in North Chicago, Ill. It also plans to exit manufacturing operations at its Morgan Hill, Calif., plant over the next year. Production of the primary products at these facilities is expected to move to other Hospira facilities and/or be outsourced to third-party suppliers. In 2008, Hospira began an approximately $20 million expansion of manufacturing capacity at its LaAurora, Costa Rica, facility, in part to accommodate some of the production being transferred from other company facilities.
Early this year, the company introduced “Project Fuel,” a multi-phased initiative to improve the company’s margins and fuel its growth. The plan is designed to capitalize on the company’s potential to increase shareholder value and improve operational efficiency by optimizing its product line, evaluating non-strategic assets and streamlining its organizational structure. In the next two years, Hospira expects to reduce its global work force by approximately 10 percent (in the next 12 months) and deliver annual cost savings of approximately $110 million to $140 million. The company will continue to look for manufacturing efficiencies and cut down on overlapping production and management operations.
“Every day our employees make valuable contributions to Hospira, our customers and the patients we collectively serve,” said Begley. “We understand the impact these decisions have on our employees and their families, especially during tough economic times. Our actions, while difficult, are designed to benefit all of our stakeholders by ensuring a strong foundation for our future.”
The company also has made strategic hires recently. In June last year, Sumant Ramachandra, M.D., Ph.D., was hired as president and chief scientific officer. He will be responsible for Hospira’s global research and development (R&D) and medical affairs organization. Ramachandra succeeded Edward Ogunro, Ph.D., who retired at the end of 2007. Most recently, Ramachandra served as vice president and senior project leader, Global Development, Schering-Plough Research Institute in Kenilworth, N.J. This past April, the company hired Brian Meadows as corporate vice president, Supply Chain. He will be responsible for demand and supply planning; strategic sourcing and supplier management; procurement; materials and production planning; transportation management and distribution operations. Most recently, Meadows was senior vice president of supply chain management at Sprint-Nextel Corporation.
Though the company may be restructuring its manufacturing footprint, that doesn’t mean it also hasn’t been in acquisition mode.
In April of last year, Hospira purchased Sculptor Developmental Technologies, which developed VeriScan Rx, a software application that supports barcode medication administration at the point of care. It is designed to streamline the medication administration process to enhance patient safety and clinician workflow. Financial details were not disclosed. In October, the company made another purchase—the EndoTool business from MD Scientific LLC. The EndoTool glucose management system is cleared by the U.S. Food and Drug Administration to establish and maintain glycemic control in acute, critical care and operating room settings by calculating the dose of intravenous insulin needed to effectively control blood glucose levels. Traditionally, nurses and other clinicians use paper-based protocols to manually monitor and adjust I.V. insulin dosing. EndoTool runs on a hospital’s existing computer system and can interface with a hospital information system. As part of the agreement, Hospira acquired additional assets related to the EndoTool business, including the MD Scientific headquarters in Charlotte, N.C., and the employees supporting the product. Financial details of the agreement were not disclosed.
On the divestiture side, in early July this year, San Clemente, Calif.-based ICU Medical, a manufacturer of medical connectors, custom medical products and critical care devices, purchased Hospira’s critical care product line for approximately $35 million in cash. The acquisition is expected to close during the third quarter of 2009. Hospira’s Begley said the sale would allow his firm to focus on “core strategic areas of specialty injectable pharmaceuticals and medication management systems, driving innovation and growth in these key businesses.” In 2005, Hospira and ICU Medical entered into a strategic manufacturing, commercialization and development agreement for Hospira’s critical care product line.