Hospira helps hospitals heal the hurting. The company makes specialty injectable pharmaceuticals (primarily generics) including cardiovascular, anesthesia, oncology, and anti-infective therapies, as well as the related drug delivery systems such as prefilled syringes. The firm's more complicated medication delivery systems include electronic drug pumps, infusion therapy devices, and related medication management software. In addition, Hospira makes some IV nutritional solutions and provides contract manufacturing services. Key customers include hospitals, alternate site facilities (such as nursing and outpatient surgical care facilities), wholesalers, and other drug manufacturers.
Many of the firm's hospital customers are members of the major US group purchasing organizations (GPOs) and integrated delivery networks (IDNs) that Hospira has pricing arrangements with. Major GPO customers include Amerinet, HealthTrust, MedAssets, Novation, and Premier. About 80% of Hospira's sales take place in the Americas. More than 60% of total annual revenues come from sales of injectable pharmaceuticals.
The company operates marketing and distribution centers across the US, and uses third party distributors in other countries. It also runs about a dozen manufacturing facilities globally, with its North Carolina, Texas, Kansas, Costa Rica, India, and Australia (Victoria) locations account for the majority of output. The firm also outsources some production to third-party suppliers. Hospira performs its product development efforts at a handful of research facilities in the US, as well as in Australia, Italy, and India overseas.
Hospira works to grow its product offerings and keep its development pipeline flowing through a number of growth strategies including acquisitions, licensing deals, and partnered and independent R&D efforts. Hospira's internal research programs are largely focused on the areas of generic specialty injectable pharmaceuticals. The company introduces a number of new generic injectables each year, with about a dozen launches in 2011 (including cancer drugs docetaxel and topotecan), and it is working to move existing products into new countries. Hospira also regularly develops new drug delivery systems for its injectables, such as emergency needleless syringe systems and medication mixing systems.
In addition, Hospira is looking to develop new generic biotech injectable drugs (biosimilars) and non-generic specialty injectables. It launched Nivestim, a biosimilar of Novartis' Filgrastim for low white blood cell counts in chemotherapy patients, in 2010. To boost its proprietary (non-generic) R&D efforts, in 2010 the company formed a licensing agreement with DURECT to develop and market DURECT's Posidur, a long-acting version of the anesthetic bupivacaine in clinical trials. Hospira added another proprietary candidate in 2010 through the purchase of drug developer Javelin Pharmaceuticals for some $145 million. The acquisition gave Hospira access Javelin's new pain medication, Dyloject, which has been submitted to the FDA for approval. If approved, Dyloject will be marketed to anesthesiologists alongside Hospira's sedation drug Precedex.
Also in 2010, Hospira boosted its commercial offerings through the purchase of the generic injectable business of India-based Orchid Chemicals for $400 million, adding a number of antibiotics and other injectable drugs to its product line. The purchase boosted Hospira's manufacturing and research operations by adding facilities in India. It also added a long-term exclusive agreement with Orchid to supply Hospira with APIs.
However, the Orchid supply arrangement was altered in 2012 when Hospira agreed to acquire one of Orchid's API manufacturing plants for another $200 million. The plant covers beta-lactam antibiotic (penicillin and penem) APIs; Orchid will continue to supply cephalosporin APIs to the company. Hospira hopes to reduce costs and ensure supply continuity by increasing its direct manufacturing operations; the purchase also adds R&D facilities that will help the company increase future API development efforts.
The plant acquisition is part of a broader manufacturing reorganization being undertaken by Hospira following several years of regulatory troubles. After having to shut down some of its production lines at its two North Carolina plants during 2010 and 2011 to fix quality issues cited in a letter from the FDA, Hospira had a bit of trouble meeting demand for some of its injectable drugs. The situation has caused some supply shortages, and the company has taken a further hit in sales as clinicians who would normally order Hospira products are forced to prescribe drugs from other companies. Hospira has been shifting its manufacturing resources to meet customer demands; it is also expanding its capacity at its facility in India.
While Hospira has grown its revenues through increased product sales over the years, including a 4% increase to a little more than $4 billion in 2011, net income has dropped in both 2010 and 2011, largely due to the company's injectable manufacturing and regulatory troubles (and the resulting expenses from remediation efforts at its plants). In addition to the North Carolina plant troubles and injectable shortages, the company's medication management systems segment took a hit from a recall and voluntary sales freeze of its Symbiq drug pump due to alarm malfunctions in 2011; the freeze was lifted when the FDA approved the upgraded Symbiq system in 2012.
The company had already launched a number of corporate streamlining measures in 2009; the restructuring program, which was completed in 2011, included a 10% workforce reduction, a product optimization plan, and a review of its noncore operations. As part of that plan, Hospira sold its critical care product line to ICU Medical for $35 million. Hospira also sold its brain function monitoring business to SEDLine, a private research firm backed by Masimo Corporation, in early 2010.
Hospira was formed through the spinoff of drug manufacturer Abbott Laboratories' hospital supplies business in 2004.