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.
The US market accounts for about 80% of Hospira's annual revenues. The company also markets its products in other portions of the Americas, the Asia Pacific region, and the EMEA (Europe, Middle East, and Africa) region. It also runs 14 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.
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 40% of Hospira's revenues. Major GPO customers include Amerinet, HealthTrust, MedAssets, Novation, and Premier.
The company's specialty injectables segment accounts for more than 60% of sales. The segment's 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 segment, 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.
While Hospira has grown its revenues through increased product sales over the years, including a 1% increase to some $4.1 billion in 2012 on growth in the specialty injectable and mediation management segments (partially offset by lower revenues in other operating divisions).
However, net income has suffered in recent years (including a net loss in 2011), largely due to the company's injectable manufacturing and regulatory troubles (and the resulting expenses from remediation efforts at its plants and restructuring measures across the organization).
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 is undergoing a broad 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. 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, in 2012 the company conducted restructuring efforts including disposal of assets and consolidation or closure of certain facilities.
Mergers and Acquisitions
Though its purchase activities have slowed, Hospira added pain drug development operations in 2010 through the acquisition of drug developer Javelin Pharmaceuticals for some $145 million. 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 agreement with Orchid to supply Hospira with APIs. The company went on to purchase one of Orchid's API facilities in 2012 for another $200 million.
Hospira was formed through the spinoff of drug manufacturer Abbott Laboratories' hospital supplies business in 2004.
The company launched a corporate streamlining measure 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.