About Hospira, Inc.

Hospira helps hospitals heal the hurting. The firm makes specialty injectable pharmaceuticals (primarily generics) including cardiovascular, anesthesia, oncology, and anti-infective therapies, as well as related drug delivery systems such as prefilled syringes. Its more complicated medication delivery systems include electronic drug pumps, infusion therapy devices, and related medication management software. In addition, Hospira makes 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. Pfizer acquired Hospira for some $17 billion in 2015.

Change in Company Type

Pfizer was particularly interested in adding Hospira's offerings to its existing portfolio of generic injectable drugs and biosimilars. Combined, the group is one of the industry's leading biosimilars producers. Hospira now operates as a subsidiary of Pfizer.

Operations

Hospira is a global firm with operations divided into three segments: Americas, EMEA (Europe, the Middle East, and Africa), and APAC (Asia, Japan, Australia, and New Zealand).

The company's specialty injectables business accounts for more than 60% of sales. Its offerings include generic drugs for cancer treatment and acute care applications, as well as proprietary drugs (such as sedation drug Precedex), biosimilars (generic biotech drugs Retacrit and Nivestim), and proprietary delivery systems (including the prefilled iSecure syringe).

The smaller medication management system business, which accounts for a quarter of sales, provides drug delivery devices including electronic infusion pumps (Plum A+ and LifeCare PCA). It also offers software and technology tools for medication safety and clinical decision support.

Other operations include infusion therapy supply manufacturing. Hospira also provides third-party contract manufacturing services to other drugmakers.

Geographic Reach

The US market accounts for more than 80% of Hospira's annual revenues but the company's reach covers more than 70 countries on five continents. The company markets its products in other portions of the Americas, the Asia/Pacific region, and the EMEA region. It also runs 15 manufacturing facilities globally, with its North Carolina, Texas, Kansas, Costa Rica, India, and Australia (Victoria) locations accounting 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 overseas in Australia, Italy, and India.

Sales and Marketing

In addition to a direct sales force, the company operates marketing and distribution centers across the US; it also uses third-party distributors in the US and other countries. 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. Such customers are served through wholesaler distributors, which account for about 45% of Hospira's revenues. Major GPO customers include Amerinet, HealthTrustMedAssetsNovation, and Premier.

In the EMEA and APAC regions, the company primarily serves hospitals and wholesalers via individual contracts.

Financial Performance

Revenue, which has held fairly steady over the past few years, rose 12% to $4.5 billion in 2014 as sales across all three geographic segments increased. Although prices for certain items (Precedex, docetaxel) have declined, overall injectable product prices have grown, contributing to higher revenues. The addition of the Sapphire infusion pump also helped boost earnings, but the divestiture of TheraDoc that year and the FDA's prohibition of the importing of the Plum, GemStar, and LifeCare PCA infusion pumps partially offset those increases.

Net income has been turbulent, with the company reporting losses in 2011 and 2013. In 2014, Hospira returned to the black with net income of $333.2 million, which was due to the higher sales, gains on the sale of TheraDoc and the surgical suction product line, and lower cost of sales. Cash flow from operations more than doubled to $661.4 million.

Strategy

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, and it is working to move existing products into new countries. In addition, Hospira is looking to develop new generic biotech injectable drugs (biosimilars), non-generic specialty injectables, and medication management systems.

Hospira has been shifting its manufacturing resources to meet customer demands; it is also expanding its capacity at its facility in India. 

To further reduce expenses, the company plans to close its Clayton, North Carolina manufacturing facility; and sell its Buffalo, New York manufacturing facility. Hospira sold its clinical surveillance software business TheraDoc for $117 million in 2014. It also sold its surgical suction product line, bringing in $21.5 million on that sale.

In 2015, Hospira was acquired by pharmaceutical giant Pfizer. By purchasing Hospira, Pfizer will grow its Global Established Pharmaceutical segment, which specializes in sterile injectable products and biosimilars. Combined, the company will work to build a leading position in the two markets, the value of which are expected to grow to some $70 billion and $20 billion, respectively, by the year 2020.

Mergers and Acquisitions

Though its purchase activities have slowed, Hospira in 2014 acquired a Brazil-based oncology distributor, Evolabis Produtos Farmacêuticos, which added more than a dozen 15 oncology products to Hospira's portfolio in Brazil.

Company Background

Hospira was formed through the spinoff of drug manufacturer Abbott Laboratories' hospital supplies business in 2004.

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Hospira, Inc.

275 N Field Dr
Lake Forest, IL 60045-2510
Phone: 1 (224) 212-2000
www.hospira.com

Stats

  • Employer Type: Subsidiary
  • CEO: F. Michael Ball
  • Chairman: John C. Staley
  • SVP Finance and CFO: Thomas E. Werner

Major Office Locations

  • Lake Forest, IL

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