Hospira-ICU Accord Reflects Outsourcing Trend of the Times

In a move that may signal a growing outsourcing trend in the medical device industry, ICU Medical of San Clemente, CA will purchase Lake Forest, IL-based Hospira’s Salt Lake City, UT manufacturing facility, equipment and inventory for about $35 million in cash. ICU will continue to manufacture products sold under the Hospira name, and the two companies will co-develop critical care products such as catheters, angiography kits and cardiac monitoring systems.

The deal is similar to a couple of outsourcing arrangements announced by Minneapolis-based Medtronic, which has also sold off some of its facilities to vendors. According to Hospira, which will continue to oversee sales, marketing, customer contracting, customer service and distribution, the agreement builds on a 10-year relationship between the firms.

“Combining Hospira’s sales and marketing efforts with ICU Medical’s unique expertise in cost-efficient custom manufacturing better positions us to meet our customers’ evolving needs for more specialized critical care products,” said John Arnott, senior vice president of Hospira’s global commercial operations. “This partnership also provides a strong foundation for future product advancements in the critical care area.”

ICU Medical, a contract developer and manufacturer of medical connectors and custom intravenous systems, said it was looking forward to the expanded relationship with Hospira.

“We are thrilled with this opportunity to further expand our portfolio of custom product offerings and strengthen our relationship with Hospira by working jointly on future development efforts for custom critical care products,” said George Lopez, president of ICU. “This transaction is an ideal means to capitalize on the expanding custom critical care market and ICU’s core competencies in custom manufacturing.”