$4.5 Billion
NO. OF EMPLOYEES: 19,000

Who is F. Michael Ball? The 57-year-old Canadian native has been CEO of Hospira since 2011. He joined the company following a bad profits year, and inherited a problematic facility in Rocky Mount, N.C. that had been served a warning letter from the U.S. Food and Drug Administration before he took his post. That first year with the company was rough. The problems in Rocky Mount forced him to replace most of the site’s leadership and hire two consulting firms to help fix the manufacturing quality issues, which led to a hit to the company’s overall financial and operational performance for the year. All told, about $487 million went into the Rocky Mount problem. Ultimately, it took until mid-2014 to resolve the issue, when a U.S. Food and Drug Administration (FDA) inspection led to no observations—but then, a Hospira site in India caught the agency’s ire, and Ball had to relive the nightmare over again.

And yet, Ball forged ahead with a smile on his face and determination to succeed. And one day in 2015, he saw the light—a $16 billion light, in fact, in the form of a coveted acquisition offer from pharmaceutical giant Pfizer Inc. In fact, Pfizer offered an almost unbelievable 40 percent more per share for Hospira’s stock than it was worth just a day before the deal was announced. The deal is expected to close in the second half of 2015.

So, who is F. Michael Ball? An optimist, for sure. He was hired for his famous “intense customer focus and exceptional results,” a reputation he made for himself during his 16 years at Irish pharmaceutical company Allergan plc. There, he helped drive top-tier financial performance over a 10-year period and earn the number 1 or number 2 market share position in most of the company’s marketed therapeutic categories. Ball’s been good for Hospira’s numbers. In 2014, he managed to boost the stock price from a low of nearly $41 on March 26, 2014, to a high (until Pfizer’s announcement) of about $67 a share on Jan. 26, 2015—a 63 percent hike.

“Given the job he’s done here, I would think he’d be very much in demand” to become the CEO of another company in need of a turnaround, said Kevin Kedra, an analyst at Gabelli.

The Hospira 2014 annual report was like a sigh of relief from a company that had had a difficult few years. “Over the past several years, we have transformed Hospira,” the report reads. And it’s true. The company pulled itself up out of its dark age and turned itself around last year.

Net sales for full-year 2014 (year ended Dec. 31) were $4.5 billion, an increase of 8.7 percent compared to full-year adjusted net sales of $4.1 billion in 2013, which exclude the impact of customer sales allowances associated with the company’s device strategy incurred in the first quarter of 2013. On a constant-currency basis, net sales increased 9.7 percent compared to full-year 2013 adjusted net sales. A strong U.S. SIP (systematic investment plan) and sales in the Other Phrama business, primarily driven by improved pricing and supply recovery, were the main contributor to the year-over-year increase. On a GAAP basis, net sales for full-year 2014 were $4.5 billion, an increase of 11.5 percent compared to GAAP full-year net sales in 2013, or 12.5 percent on a constant-currency basis. GAAP full-year net sales in 2013 include the impact of the customer sales allowances associated with the company’s Device Strategy.

“Hospira’s solid fourth-quarter results contributed to a year of excellent growth for the company,” said Ball when the end of year results were released. “Despite the entry of generic competition in the United States for our proprietary sedative Precedex, we delivered a very good year for Hospira. Our results speak to the significant progress we made—as well as the multiple milestones we achieved—in our key growth areas of generic injectables, biosimilars and devices.”

Initiated in 2013, Hospira’s Device Strategy was meant to establish a streamlined and modernized device portfolio to address customer needs and to position the company for future innovation and growth, all while supporting continued advancement of device remediation, including quality improvement efforts. The strategy built on the company’s comprehensive device review of its global installed base of more than 575,000 infusion pumps in 2013. In January 2015, Hospira was able to announce that the FDA lifted the import alert (yes, another problem Ball had to deal with) that previously prohibited U.S. importation of infusion pump devices manufactured in Hospira’s Costa Rica device manufacturing facility, including the Plum A+ and Lifecare PCA infusion pumps.

“In 2015, we expect that our continued efforts to streamline and modernize our portfolio will result in a number of key product launches, with Hospira ultimately providing the most advanced and intuitive pumps in the industry,” said President of Hospira Medical Devices David J. Endicott.

Endicott took on the newly created position of president of Medical Devices early in 2014. It was his responsibility to establish a fully integrated device organization – leading the commercial, research and development, manufacturing and related support functions to continue to advance the company’s product pipeline, execute its device strategy and ultimately drive global growth. Like Ball, he, too, joined Hospira from Allergan, bringing more than 25 years of industry experience with him to fuel the company’s invigorated mission to grow its medical device business.

Hospira Medical Devices didn’t see any regulatory device approvals in 2014—the fruits of the device strategy have been coming forth this year, with the FDA clearance of the Plum 360 infusion system in January. The system, which uses the Hospira MedNet safety software, is designed to help improve the safety and efficiency of intravenous medication administration.

The future of Hospira is in the hands of Pfizer now. As Crain’s Chicago Business noted in February, there was a time when CEOs would use “scorched earth tactics” to prevent buyouts that would make shareholders rich but would cost many, many jobs. Today, the promise of big paydays for outgoing executives in an acquisition, as well as the reality that most smaller fish (particularly in the pharmaceuticals industry, and to a lesser degree, medtech) are getting swallowed by the big players, makes acquisitions such as these unsurprising. Ball is predicted to walk away from the Pfizer deal with more than $80 million. We wish Hospira luck.

$4.00 Billion
NO. OF EMPLOYEES: 17,000

It pays to be an optimist. Literally. In his 1991 book “Learned Happiness,” psychologist/educator/author Martin E.P. Seligman, Ph.D., claims optimists are more successful than cynics due to the way they handle setbacks. “They perceive it as a challenge and try harder,” he noted in his book.

Michael F. Scheier, a psychology professor and head of Carnegie Mellon University’s Psychology Department, came to the same conclusion in 2010, contending that optimists’ “active coping techniques” make them less prone to failure.

“We know why optimists do better than pessimists,” Scheier told The Atlantic in a 2012 interview. “The answer lies in the differences between the coping strategies they use. Optimists are not simply being Pollyannas; they’re problem- solvers who try to improve the situation. And if it can’t be altered, they’re also more likely than pessimists to accept that reality and move on.”

F. Michael Ball easily fits that description. The Hospira Inc. CEO has been inspired—energized, really—by the company’s ensuing string of troubles, and he’s maintained a positive attitude in the face of mounting hardships.

Such sanguinity served Ball well last year as he confronted the company’s ongoing issues with product recalls and manufacturing deficiencies. U.S. Food and Drug Administration (FDA) inspectors found fault once again with the firm’s Rocky Mount, N.C., facility, citing the plant in March for nearly two dozen violations of Current Good Manufacturing Practices and poor quality control. The issues have hounded Hospira for the last three years and have led to drug shortages resulting in small batch releases. JPMorgan Chase & Co. estimates that 47 percent of the FDA’s Drug Shortage List was either fully or partly manufactured by the 10-year-old firm.

The Rocky Mount citation was just the start of Hospira’s regulatory woes in 2013: The company’s Costa Rica-made infusion pumps earned an import ban during the winter, and its GemStar system ran into FDA trouble twice—once in the spring for a faulty battery, and again in the fall for malfunctioning pressure sensors. Both problems resulted in Class I recalls.

In May, Hospira’s infusion pump manufacturing site at its Lake Forest, Ill., headquarters came under fire for alleged failures in design, corrective action, records maintenance, document controls and adverse event reporting. In a May 9 warning letter, FDA inspectors chided the firm for failing or refusing to report the results of adverse events, improperly handling customer complaints, and mislabeling the Plum A+ pump’s battery, among other problems.

Perhaps most troubling about the May 9 letter, however, was the FDA’s concerns with Hospira’s plan to streamline and modernize its infusion systems. The firm is spending up to $350 million to retire its Symbiq, GemStar and older Plum pumps—all of which have endured regulatory troubles—and replace them with the Plum A+, LifeCare PCA and Sapphire models (Hospira obtained the latter system through a licensing agreement with Q Core Medical in January 2013). Coupled with its “Global Device Strategy” was a promise from Hospira to amend its quality systems to avoid future problems with the FDA. The company has spent $375 million since the third quarter of 2011 in various remediation efforts for its pharmaceuticals and infusion pumps, both of which have been targeted by the FDA for quality and safety issues.

Hospira bigwigs are counting on the Global Device Strategy to reduce complexity, enhance pump performance and improve the company’s ability to meet customer expectations and regulatory standards. The FDA is not so hopeful, though.

“FDA acknowledges your firm’s Global Device Strategy,” the agency’s May 9 letter stated. “FDA has significant concerns, however, with the timeliness of your firm’s plan to replace Symbiq, GemStar and other legacy infusion pumps with remediated Plum A+ pumps.”

Hospira’s bureaucratic bungles were not limited to its infusion pump business, however. In May (a particularly cursed month), the company received an FDA warning letter for reported good manufacturing practice deficiencies at its pharmaceutical production facility in Irungattukottai, India. The letter cited the firm’s failure to establish and follow appropriate written procedures, including improper facility maintenance and validation of all aseptic and sterilization processes.

Not surprisingly, the FDA’s incessant nitpicking impacted 2013 revenues. Sales remained largely stuck in neutral, hovering at $4 billion for the third consecutive year (about the extent of the FDA’s warning letter continuum), and gross profit slid 3 percent to $1.08 billion.

The company’s full-year 2013 income from operations was obliterated by warning letter-related charges, corrective action costs, higher SG&A expenses and implementation of the Global Device Strategy. On a GAAP basis, income plunged 71 percent to $17 million, according to Hospira data.

Medication Management product revenue (earnings from drug delivery pumps, safety software and disposable administration sets) took a big hit in 2013 (year ended Dec. 31), plummeting 24.3 percent, but the decrease partially was offset by a 7.4 percent spike in specialty injectable pharmaceuticals (SIP).

Executives attributed the robust SIP sales to improved pricing and supply in the United States, though the increase partly was hampered by declines in both U.S. docetaxal proceeds and Medication Management revenue.

Nevertheless, Hospira’s SIP products out-performed its infusion pumps in every world region last year, besting the systems by 33 percent in the Americas; 23 percent in Europe, the Middle East and Africa; and 16.6 percent in Asia Pacific.  Medication Management sales were worst in the Americas, where revenues sank 25.6 percent to $630 million.

Ball, naturally, was unfazed by the losses. He remained characteristically upbeat in his annual shareholder message, branding 2013 a “year of significant progress” that allowed Hospira to reinforce its foundation for growth. “The progress we’ve made is driving results—and advancing the many opportunities we’re pursuing for growth tomorrow,” Ball said in the opening pages of the 2013 annual report. “The initiatives… represent a ‘sea of opportunity’ for Hospira. They also address many of the pressing issues facing our customers and global healthcare today…we believe the progress we have made in both reinforcing our foundation and turbocharging growth position us well going forward. We are tapping into many of the opportunities available to Hospira today, towards our goal of delivering sustainable growth and shareholder value.”

Spoken like a true optimist.

$4.10 Billion
NO. OF EMPLOYEES: 16,000

“If you build that foundation, both the moral and the ethical foundation, as well as the business and the experience foundation, then the building won’t crumble.”    —Henry Kravis

Most successful businesses have inspirational turnaround tales woven into their histories. Cantor Fitzgerald CEO Howard W. Lutnick borrowed, bankrolled and brokered his way back from the brink of extinction after terrorists wiped out two-thirds of the investment firm’s New York City staff; similarly, first-time CEO Ingar Skaug led a corporate cultural coup to reclaim profits (and emotional health) after the top management at Scandinavian shipping multinational Wilh. Wilelmsen died in a plane crash. And Steve Jobs reformed a near-bankrupt Apple with imagination, passion and creative genius.

CEO F. Michael Ball is still working on Hospira Inc.’s comeback yarn. The Lake Forest, Ill.-based company was plagued last year by a continuing string of recalls, bans, drug shortages, quality issues and technical failures spawned by manufacturing problems at its Texas and North Carolina factories. The firm is spending more than $375 million to rectify those problems and overhaul its entire U.S. manufacturing network.

“We [have] invested in remediation actions across our global footprint to improve our first-pass quality and to ensure consistent processes and improvement across our operational footprint,” Ball told shareholders at the start of Hospira’s 2012 annual report. “It was a busy, productive year. But it was not without challenges. Although we made progress on our number-one priority of reinforcing Hospira’s foundation, doing so involved a great deal of time, effort and expense, impacting not only our financial results but also our ability to supply product to our customers.”

Hospira’s fixes to its crumbling foundation stifled overall sales last year at $4.1 billion. Gross profit plummeted 20.3 percent to $1.1 billion as executives instituted a plan to buttress its quality, compliance and production processes in accordance with U.S. Food and Drug Administration (FDA) standards. Over the last two years, the agency has uncovered a heap of quality control issues at the company’s factories in Rocky Mount and Clayton, N.C.; McPherson, Kan., Austin, Texas; and Boulder, Colo.; prompting warning letters and 483 inspection reports that eventually triggered costly production shutdowns and nationwide shortages of oncology drugs. A House committee report released last summer virtually absolved Hospira of responsibility for the shortages, claiming FDA reprimands force generic drug makers to take “their manufacturing off-line simultaneous to other competitors…” Consumers, however, have not been as merciful: In April 2012, Jennifer Lacognata of Tampa, Fla., filed a class-action lawsuit against the company, claiming a shortage of a vitamin A medication that Hospira stopped making in 2010 caused her to lose sight in one eye. A federal judge ruled against her in July, contending the firm is not responsible for keeping a sufficient backlog of the drug to avoid potential shortages.

Though she lost, Lacognata’s lawsuit represents a new legal strategy by patients and/or their families to hold pharmaceutical firms more accountable for their manufacturing and supply chain blunders. Such gaffes resulted in the July recall of four injectable cancer drugs and a lot of injectable dextrose as well as its Symbiq and Plum A+ infusion pumps and Carpuject syringe cartridges containing morphine sulfate and hydromophone (narcotic pain killers). Though the problem turned out to be more extensive than first reported (affecting as many as 280 lots of 15 different Carpuject products), the FDA left the devices in circulation to avoid immediate supply shortages and instead alerted healthcare providers to visually inspect the cartridges for potential overfill and adjust doses when necessary.

Hospira’s manufacturing and quality missteps took a considerable toll on the company’s 2012 earnings (year ended Dec. 31). Remediation expenses reduced stock value by 66 cents and limited the Specialty Injectable Pharmaceuticals sales increase to a mere $8.5 million. Medication Management revenue, conversely, rose 3 percent to $1 billion despite the Symbiq and Plum A+ recalls.

Problems with the Symbiq infusion pump began in August, roughly five months after the company received FDA clearance for the enhanced 3.13 version of its advanced infusion system platform. Hospira issued a “correction letter” to inform customers of potential touch screen problems on two Symbiq pump models ranging from delayed responses, erroneous settings and failure to respond to instructions. Rather than advising customers to return the affected pumps, the letter provided explicit directions to confirm correct infusion settings and stop an infusion if needed.

Two months later, the FDA issued a Class I recall of the Symbiq pumps, warning that a touch screen malfunction could put patients in danger. Then in early November, the agency placed a voluntary hold on Symbiq pump shipments to new U.S. customers. The move, however, did not affect Hospira’s bottom line—Medication Management sales in North/South America jumped 4.6 percent to $846.8 million, according to the company’s annual report. Executives attributed the sales increase to strong demand for Plum infusion pumps and MedNet safety software, which links infusion devices with hospital pharmacies and information systems, enabling clinicians to better manage intravenous (IV) infusion data at the point of care.

Hospira’s tango with the FDA over its Plum infusion pumps unfolded similarly to the Symbiq saga, starting an Aug. 22 warning letter about quality problems at the Costa Rican factory that manufactures the device. Inspectors to the facility in April 2012 uncovered several problems with the Plum line of pumps, including a malfunctioning alarm system that engineers had redesigned after a February 2011 recall. The agency also claimed the company Hospira failed to prove it met deadlines for improving its relevant quality processes and management procedures at the La Aurora de Heredia plant.

Four months after receiving the FDA’s warning letter about its Costa Rican manufacturing deficiencies, Hospira issued a Class II field recall for its Plum A+ infusion devices. The company cited troubles with the pump’s door roller assembly, noting the mechanism could potentially lead to unrestricted flow and/or over-delivery of medication during the removal of the IV administration set. Designers refabricated the door roller assembly to improve its strength, and the company is expected to begin replacing the component later this year.

$4.1 Billion
NO. OF EMPLOYEES: 15,000

For Hospira, fiscal year 2011 (ended Dec. 31) began and ended with changes at the top. In March, the board of directors of the Lake Forest, Ill.-based company appointed F. Michael (Mike) Ball as the company’s new CEO and a member of the board. Ball was president of Allergan Inc. (where he had been for 16 years) and he succeeded the company’s founding CEO, Christopher B. Begley, who became executive chairman. Hospira provides infusion therapy, systems and supplies; infusion pumps and other medication management systems; specialty injectables; and contract manufacturing services.

“From the outset of our CEO search, the board and I were determined to identify a candidate who would extend Hospira’s growth trajectory, expand our global reach, and inspire our employees as we continue our patient-focused journey to sustainable top-tier financial performance,” said Begley at the time of the announcement. “With his proven track record of growing complex global businesses, demonstrated success in leading diversified healthcare portfolios and strong commitment to creating value for all company stakeholders, we found the perfect fit with Mike Ball. We are thrilled to welcome Mike to the Hospira family, and I look forward to partnering with him and our board to continue to advance our great company—a company that is stronger and better positioned for success now than at any point in our rich history.”

During his tenure at Allergan, Ball was responsible for accelerating growth in international markets and leading the strategy and execution of global commercial activities for a diverse slate of businesses, including specialty pharmaceuticals, over-the-counter products and surgical devices.

As executive chairman, Begley’s task was to focus on ensuring continuity of leadership, providing strategic counsel to Ball and managing an orderly transition of the CEO responsibilities. Begley assumed his new role after launching Hospira as the company’s founding CEO following its 2004 spin off from Abbott Laboratories. During his tenure, Hospira doubled its market capitalization, geographic footprint and revenue outside the United States; improved adjusted gross margins by more than 1,000 basis points; and generated more than $3 billion in cash flow from operations, according to company statistics.

In early December, the board announced that Begley would retire as executive chairman. John C. Staley, a founding director of the company’s board, took over as non-executive chairman in January.

For full-year 2011, net sales were $4.1 billion, an increase of 3.6 percent, and earnings per share was $3.04.

“While 2011 was a challenging year as a result of our quality transformation efforts, we met our revised financial expectations, generating over $4 billion in sales, and advanced our remediation efforts,” said Ball. “We made significant progress on many fronts during the year, including the launch in the United States of two important oncolytic products and an anti-infective drug, as well as initiating the Phase III U.S. clinical program for our biosimilar erythropoietin. We remain firmly committed to reinforcing our foundation and instilling a culture of high quality throughout the organization, actions we believe will create a strong competitive advantage for Hospira and position us for sustainable, long-term growth and increased shareholder value.”

Partially offsetting growth was device quality issues (infusion pump recalls), the continued impact on net sales of certain quality actions the company undertook to improve the global status of its regulatory compliance, including responding to the U.S. Food and Drug Administration (FDA) observations and warning letter related to the company’s manufacturing facility in Rocky Mount, N.C.

Income from operations decreased 14.7 percent to $669 million for the full year, compared to $784 million for the full year of 2010. The decline was a result of certain quality actions and
inventory losses.

“While resolving the quality-related issues entails challenges in 2012, we believe that the quality improvement process will make Hospira an even stronger, more competitive global company,” said Ball. “We will also continue investing in Hospira’s growth opportunities in 2012. Reinforcing Hospira’s foundation and driving growth will best position Hospira to serve the needs of our customers and patients, and deliver strong value to our shareholders.”

In 2011, the company announced that it planned to spend as much as $375 million over three years to bring its manufacturing operations up to par. One site of particular focus is Hospira’s Rocky Mount plant, used in the production of parenterals and a part of the company’s contract manufacturing business. The plant provides 25 percent of Hospira’s annual revenue. Approximately 80 percent of the spending is expected to go to Rocky Mount, the report said. The remediation effort will encompass both the pharma and medical device sides of the business.

“Quality assurance auditor” and “senior biological quality supervisor” are among the positions the company hoped to fill by the end of the year, according to reports.

Throughout 2011, Hospira continued efforts to resolve issues with its line of Symbiq infusion pumps.

Listed by the FDA as a Class II recall in November 2010, Hospira continued efforts to resolve issues for the power cord used on the Symbiq one-channel infuser and Symbiq two-channel infuser. Complaints of broken, bent, or missing prongs, charring, sparks, visible smoke, and a burnt smell have been reported on Symbiq AC power cords, resulting in the recall.

Hospira also continued efforts on its Feb. 14, 2011, recall for the 205,689 Plum XL, XLM, and XLD infusion pumps distributed nationwide and internationally. According to the 8-year-old company, Hospira received reports of the Plum XL, XLM, and XLD infusion pumps with no audible alarm at the low-audio-level setting.

At the end of March 2011, the company submitted a 510(k) application with the FDA for modifications to the Symbiq infusion system.

“With this submission complete, we are on track to meet our commitments for resuming new customer shipments of Symbiq infusion pumps and advancing the continuous evolution of one of the most innovative infusion platforms in the hospital today,” said Sumant Ramachandra, M.D., Ph.D., senior vice president, Research & Development and Medical & Regulatory Affairs, and chief scientific officer, Hospira. “As one of the first companies to file an application under the draft FDA guidance for infusion pumps, we are looking forward to continuing to work with the Agency through this new and innovative regulatory process.”

In May 2011, Hospira received regulatory approval from Health Canada for its software upgrade to the Symbiq. In March this year the FDA provided regulatory clearance for the upgraded Symbiq device.

$3.9 Billion
NO. OF EMPLOYEES: 14,000<

“If you can find a path with no obstacles, it probably doesn’t lead anywhere.”
—Frank A. Clark<

Like most racing cyclists, Christopher B. Begley has become a master at dodging obstacles. He rarely embarks upon a clear path, one that is free of the various roadblocks that can sidetrack him or prevent him from crossing the finish line. Naturally, such paths are more difficult to maneuver, but Begley is always up for the challenge—in fact, he thrives on the adrenaline created by competition and the self-satisfaction of knowing he can overcome most any obstructions in his way.

“…with experience, training and a keen focus on staying the course, any obstacles can not only be overcome, they can be transformed into opportunities,” Begley writes in the company’s 2010 annual report, explaining to shareholders the lessons he’s learned from the bike racing circuit.

Such perseverance and razor-sharp focus has served Begley well in his day job as chairman and CEO of Hospira Inc., a specialty pharmaceutical and medication delivery company based in Lake Forest, Ill. Begley, who handed over the reigns of the company in March to F. Michael Ball, president of Botox maker Allergan Inc.,held the top spot at Hospira since the company’s 2004 spin-off from Abbott Laboratories. Over the last seven years, the firm’s market value more than doubled to $9 billion and its drug development pipeline has ballooned to include about 200 injectable generic drugs (among them: Precedex, Retacrit and Nivestim). The company also has grown into a global player from a largely U.S.-based operation, and executives are hoping to ensure future growth by launching a business to develop cheaper generic biotech drugs under the nation’s new healthcare reform law.

Like any bike race, though, Begley’s tenure hasn’t been obstacle-free. The economy’s self-implosion in 2008 and 2009 dampened demand for many of Hospira’s medication management products, leading to a 1.2 percent decrease in device-centric sales in 2009 and a 9.6 percent dive last year, though the 2010 drop-off partially was due to a recall of two models of the company’s infusion sets, according to the company’s 2010 annual report. Medication management devices—which include infusion pumps and administration sets, gravity administration sets, software applications and devices that support point-of-care medication administration, and Hospira MedNet safety software and related services—garnered $999.1 million for the company in 2010, year ended Dec. 31. Since the start of the recession in 2008, medication management device sales have fallen 10.7 percent.

Specialty injectable pharmaceutical revenue, on the other hand, climbed 13.3 percent last year to $2.3 billion. Sales of those products have skyrocketed 29 percent since the recession began, helping to bolster the company’s overall sales by 1 percent last year to $3.9 billion and 7 percent in 2009 to $3.8 billion. Adjusted gross margin and adjusted operating margin both improved in 2010, reaching 42.5 percent and 20 percent, respectively, up from 40 percent and 19 percent, respectively, in 2009.
Adjusted diluted earnings per share grew 6 percent to $3.31 per share.<

“Like a road race, 2010 was a year marked with milestone achievements,” Begley noted, “as well as challenges scattered throughout the course.”

Those challenges included an April 2010 warning letter from the U.S. Food and Drug Administration (FDA) about manufacturing problems at its facilities in Rocky Mount and Clayton, N.C. The agency found that Hospira’s emulsion products at the Clayton facility did not meet manufacturing standards, and the manufacturing processes at Rocky Mount were not properly validated. Some of the problems were repeat violations that were first discovered in an FDA inspection in April 2009.

Other inadequacies cited by the FDA included procedures related to quality control, investigations and medical device reporting obligations. The FDA inspected the company’s Clayton facility in January and did not observe any violations; the agency was scheduled to examine the Rocky Mount plant during the second quarter of 2011.

Around the same time Hospira received the FDA’s warning letters, the company also was experiencing problems with its Symbiq and Plum A+ drug infusion pumps. The devices are designed to help healthcare professionals deliver specific amounts of drugs, blood products and other solutions intravenously into patients. They also are designed to detect air bubbles in intravenous lines, a potentially dangerous condition that could lead to a severe injury or death.

The company in April put a voluntary hold on shipping its Symbiq pumps to new customers after it received complaints about an alarm failure. It followed up the hold on shipments with a Class 1 recall in August, though the recall did not involve pulling pumps from hospitals that already use them. In October, Hospira decided to upgrade software on the Symbiq pumps; Begley said the company would not resume shipping the device until that upgrade is cleared by the FDA.

Hospira experienced the same alarm failure problem with its Plum A+ infusion pump, but the company is correcting the issue through a field recall.

Executives correlate the problems with both the Symbiq and Plum A+ pumps to the disappointing performance of its medication management business in 2010. Sales in that division were further impacted by an ongoing recall at Baxter International Inc., which is pulling 200,000 Colleague-brand infusion pumps from U.S. hospitals following years of problems. Baxter has two years to complete the recall while offering replacement devices or customer refunds, and Hospira officials have said the market has stalled while hospitals work through their options.

As if the problems with its infusion pumps were not enough, Hospira also experienced an increase in backorders in the middle of 2010, which hampered pharmaceutical sales. By the end of last year, the company had cut backorders in half and had drafted a plan to restore service levels to customers.

Overall profit at Hospira was further impacted last year by higher sales and promotional expenses as well as a 25 percent hike in research and development costs (the firm spent $300.5 million on R&D), including a payment related to a partner company developing a bone-marrow transplant product.

18. Hospira

$3.9 Billion

KEY EXECUTIVES:
Christopher B. Begley, Chairman and CEO
Terrence C. Kearney, COO
Sumant Ramachandra, M.D., Ph.D., Sr. VP, R&D and Chief Scientific Officer
Thomas E. Werner, Sr. VP, Finance, and CFO

NO. OF EMPLOYEES: 13,500

GLOBAL HEADQUARTERS: Lake Forest, Ill.

Officials for Hospira have said that the company is neither a pharmaceutical maker nor a device manufacturer. It’s both. To take advantage of the synergies with its products, it has to be. The firm makes generic drugs and pairs them with its infusion pump technology. Infusion pumps—which have come under special scrutiny by the U.S. Food and Drug Administration (FDA) recently following a number of recalls—are ubiquitous devices in the hospital setting that deliver liquid medications, chemotherapies, anesthesia and nutrients to patients at a controlled flow rate over a period of time. Most of the company’s technology is proprietary because of the device technology, not the drug.

According to industry analysts estimates, Lake Forest, Ill.-based Hospira is the market leader in infusion pumps. The sector is dominated by Hospira, Baxter International and CareFusion (formerly part of Cardinal Health). And, at the moment, thanks to recall woes and unresolved technology problems at Baxter, Hospira has a great opportunity to expand its lead at Baxter’s expense. In April, the FDA ordered Baxter to recall and destroy the 200,000 Colleague brand infusion pumps it has sold to hospitals and other institutions over a decade. It’s a problem that’s been going on for years. Hospira had a brief infusion pump recall situation in September last year prompted by an FDA warning letter related to faulty AC power cords. The cords, manufactured by a supplier, led to reports of sparking, charring and fires in or around the plug, according to Hospira. The problem was swiftly corrected.

To take advantage of Baxter’s setback, Hospira has been ramping up production at plants in California and Costa Rica to supply hospitals. The company also has learned from Baxter’s mistake. It has suspended its high-end Symbiq infusion pump until technology snafus are resolved. It is a highly advanced pump, but most hospitals are ordering older models. Hospira also is working with the FDA to resolve problems.

But that’s 2010. What about fiscal 2009?

Early in the year Hospira launched a program it calls “Project Fuel” to improve margins and help drive growth through improved operational efficiency. Translation? Cutting back and cutting staff. The plan is to unfold over the course of two years (though most staff reductions happened within a year), during which time the company expects to reduce its global workforce by 10 percent, with overall expected annual cost savings of approximately $110 million to $140 million (beginning in 2010). Streamlining efforts will include “de-layering” the company’s management structure, consolidating certain functions and heightening the focus on process improvement to reduce complexity and redundancy, accelerate decision making and raise overall productivity.

For fiscal 2009 (ended Dec. 31), net sales increased 6.9 percent to $3.9 billion, compared with $3.6 billion for the prior year. Net income was $403 million, an increase of 25.9 percent, compared with fiscal 2008. Sales of pharmaceutical-based product sales grew 10.5 percent to $2.8 billion, while device-centric sales dropped marginally by 1.2 percent to $1.1 billion (all on an actual currency basis).

Also as part of its Project Fuel initiative, in July, Hospira sold the commercial rights and physical assets of its critical care product line to ICU Medical, Inc., for $35 million. San Clemente, Calif.-based ICU Medical is a manufacturer of safe medical connectors, custom medical products and critical care devices. The company has manufactured the majority of Hospira’s critical care products for more than four years. In 2005, Hospira and ICU Medical entered into a strategic manufacturing, commercialization and development agreement for Hospira’s critical care product line. As part of this previous agreement, ICU Medical also purchased Hospira’s Salt Lake City, Utah, facility where the majority of Hospira’s critical care products are produced. ICU Medical’s devices are designed to protect patients from catheter-related bloodstream infections and healthcare workers from exposure to infectious diseases through accidental needle sticks or hazardous drugs.

In a move to bolster its infection control portfolio, Hospira purchased Salt Lake City-based TheraDoc in December. TheraDoc is a clinical informatics company that develops hospital surveillance systems. Its two leading products, Infection Control Assistant and Antibiotic Assistant, joined Hospira’s expanding portfolio of medication safety and infection management products.

According to the Centers for Disease Control, there are 99,000 deaths a year due to hospital-acquired infections (HAI) and 1.7 million HAIs annually.

Also in December, the company unveiled plans to purchase the generic injectable finished-dosage-form pharmaceuticals business from Orchid Chemicals and Pharmaceuticals Ltd in Chennai, India, for $400 million. Orchid is among the largest generic beta-lactam antibiotics manufacturers globally. The acquisition includes Orchid’s beta-lactam antibiotics manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities) and pharmaceutical research and development facility at Irungattukottai, Chennai, as well as its generic injectable product portfolio and pipeline. Beta-lactam antibiotics represent a class of drugs with a wide spectrum of antibacterial activity.

In personnel news, Brian Meadows became corporate vice president, Supply Chain, in April 2009. He is responsible for enterprise-wide supply chain operations including demand and supply planning; strategic sourcing and supplier management; procurement; materials and production planning; transportation management and distribution operations. He also will lead the procurement effort within Project Fuel.

Most recently, Meadows, 48, was senior vice president of supply chain management at Sprint-Nextel Corporation, where he led the integration of the supply chain operations of Sprint and Nextel Communications. Meadows earned his bachelor’s degree from the University of Wisconsin-Madison in Civil and Environmental Engineering, and his master’s of business management from the Kellogg School of Management at Northwestern University.

$3.6 Billion
NO. OF EMPLOYEES: 14,500

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.

“$3.4 Billion

KEY EXECUTIVES:

Christopher B. Begley, Chairman and CEO
Terrence C. Kearney, COO
Thomas E. Werner, Sr. VP, Finance, and CFO
Brian J. Smith, Sr. VP, General Counsel and Secretary
Richard J. Hoffman, VP, Corp. Controller and Chief Accounting
Officer

NO. OF EMPLOYEES:

14,000

GLOBAL HEADQUARTERS:

Lake Forest, IL

What a difference a year and a large investment can make. After an encouraging, yet somewhat flat 2006, with annual net sales growth of only 2.6% as the company continued its transition after spinning off from Abbott Laboratories in 2004, Hospira rebounded in a big way and was right on target with the executive team’s stated goal in early 2007. Net sales for the year grew 28% to $3.4 billion, compared with $2.7 billion in 2006. Gross profit increased from $939 million in 2006 to $1.17 billion in 2007, while net income was nearly $137 million, compared with nearly $238 million in 2006.

“Our 2007 results point to the success of our strategies of investing for growth and improving operating margins and cash flow. It’s through our disciplined focus on executing these strategies that Hospira has become the growing, profitable company it is today and is positioned for continued success going forward,” said Chairman and CEO Christopher Begley at Hospira’s 2008 annual shareholders meeting in May.

Although the company steadily has increased its international presence, 69% of net sales came from the United States, where totals reached  $2.37 billion—a 6.9% increase from $2.22 billion in 2006. International sales, however, exploded for the company as they grew 127% to nearly $1.1 billion in 2007, compared with $468 million in 2006.

The bulk of the marked increase in global sales was attributed to Hospira’s $2 billion acquisition of Australia-based Mayne Pharma Ltd. early in 2007; excluding Mayne Pharma’s contributions, the overall net sales increase was 4%. Along with expanding the company’s global presence, Mayne Pharma significantly enhanced Hospira’s specialty injectable pharmaceuticals portfolio, particularly oncology products.

The company’s $551 million in cash flow from operations also was “instrumental,” Begley said, in enabling the company to pay down some of its debt and invest in new ventures. One such initiative was the establishment of a new operational structure that included the appointment of three new regional presidents and division of the overall business into two product areas: Global Pharmaceuticals and Global Devices. Specialty Injectable Pharmacueticals and Medication Management Systems (MMS) were the primary growth drivers.

As the global market leader for generic injectable pharmaceuticals, Hospira’s Specialty Injectable Pharmaceuticals branch includes more than 190 generics in excess of 900 dosages and formulations in areas such as analgesia, anesthesia, anti-infective, cardiovascular and oncology. With many injectables coming off patent in the next five to seven years, Hospira believes this division will be a profitable growth driver in years to come. Total US sales for 2007 were $876 million, an 8.4% increase from $808 million reported in 2006. (Editor’s note: International breakdowns for each business unit were not provided in Hospira’s annual report.)

The primary focus of the Global Device branch, known as Medication Delivery Systems, was MMS, which includes more than 400,000 installed infusion devices. US-based net sales for Medication Delivery Systems increased 4% in 2007 to $890 million, compared with $855 million in the prior year. Growth in infusion therapy and MMS sales were the primary drivers.

Last year, the company notably began a full-scale rollout of Symbiq, an advanced general infusion device, and introduced enhanced security features for the wireless version of Hospira MedNet drug safety software. Language translations were another initiative undertaken for key markets.

Hospira also has an Injectable Pharmaceutical Contract Manufacturing division, which reported US net sales of $149 million in 2007, an 18.7% decrease from $183 million reported for 2006.

Efforts to optimize manufacturing operations as a partial means of improving margins and cash flow also saved the company $15 million in 2007.

At the close of the year, 16 manufacturing facilities were in operation globally. Hospira had closed its Donegal, Ireland facility in 2006 and completed its planned closure of an Ashland, OH facility in late 2007. The company’s Montreal, Canada facility was expected to close by the end of the first half of 2008. In addition, the company is still on track to phase out production at its North Chicago, IL facility (leased from Abbott) by early 2010. By the end of 2007, Hospira had nearly completed its $60 million expansion of manufacturing capacity at its McPherson, KS facility.

Looking at the first quarter of 2008, net sales increased 13.5% to $888.7 million, compared with $782.8 million in the first quarter of 2007.

“By focusing on our business strategy, Hospira continues to gain momentum,” said Begley. “The first quarter was a good start to 2008, with particular strength in our specialty injectables business. Company-wide, we are delivering the right products to our customers that help reduce their costs and improve patient safety. Our focus will translate into another year of solid growth for Hospira.”

There doesn’t appear to be any undertakings as large as the 2007 Mayne Pharma acquisition on tap for 2008, but Hospira already snapped up another company at the end of April. Hospira bought Sculptor Developmental Technologies, a subsidiary of St. Clair Hospital, for an undisclosed sum of money. Sculptor is a software engineering company that will provide Hospira with barcode point-of-care technology for patient safety and clinician workflow capabilities. The company’s VeriScan Rx is a software application that supports barcode medication administration.”

$2.6 Billion
No. of Employees: 15,000

According to the company’s Web site, Hospira’s name, which was chosen by its employees, was derived from the words hospital, spirit, inspire and the Latin word spero, which means hope. And the company’s upward climb during the past couple of years shows that hope—and dedication to achieving long-term goals—has paid off.

Since its spinoff from Abbott Laboratories in 2004, the company has focused on a strategy of investing for growth and improving margins and cash flow. While Hospira had some ups and downs during 2006—with somewhat flat numbers for the first three quarters of the year—the company achieved an upswing in the fourth quarter (ended Dec. 31) with a 9.3% increase compared with the same quarter in 2005. In addition, that quarter had a nearly 80% boost in profit as net income jumped from $26.6 million in fourth-quarter 2005 to $47.4 million in the same period of 2006.

Overall net sales in 2006 grew 2.4% to $2.69 billion (compared to $2.63 billion in 2005), which was better than the 0.7% decrease seen in 2005 when compared with 2004. US sales were responsible for 83% of total sales in 2006.

With the company reaching its long-term goals sooner than expected since its spinoff, Hospira’s CEO, Christopher Begley, said in the annual report that the company is now looking to set higher standards, including achieving “higher single-digit growth rates.”

The year 2006 marked a time during which the company invested in an IT infrastructure, expanded R&D initiatives and added new product pipelines. The company’s Specialty Injectable Pharmaceuticals division launched 10 new products, including several injectable generic products. While the division encountered fewer sales in 2006, having gone from $845 million in 2005 to $808 million in 2006, the company said this decrease was a result of Hospira’s 2005 termination of the Berlex imaging agent distribution agreement. When looking at the numbers excluding Berlex, the division actually increased sales, the company said.

In the Medical Management Systems division, the company estimated that last year, more than 400,000 of its electronic drug delivery pumps were in use. The division had an increase of 7.4% in 2006, totaling $855 million in net sales. (In 2005, the division only grew by 1.7%.) In this division, which includes infusion therapies and supplies, product launches included the VisIV next-generation non-PVC, non-DEHP IV container.

The company also has a contract manufacturing division, which held steady in 2006 but expects to see a slight slowdown in 2007, as several contracted products have lost or will lose patent protection this year. The decreased demand could negatively impact 2007 by about $50 million, the company said.

The manufacturer of hospital products, with 18 manufacturing plants, has been busy re-aligning its operations over the past year or so. Hospira closed its Donegal, Ireland facility late in 2006, and expects to close its Ashland, OH facility sometime this year. In addition, its Montreal, Canada facility will close in 2008, and production will be phased out of the company’s North Chicago, IL facility by 2010. In line with the planned closure of the Chicago facility, Hospira began a $60 million expansion at its McPherson, KS facility in 2006 to accommodate the activities that will be shifted there when the Chicago operations cease.

As part of its growth strategy, Hospira also has been strengthening its profile through collaborations and acquisitions. The company acquired Australia-based BresaGen Ltd. for $17.1 million in the second half of 2006. BresaGen offers Hospira a biogenerics line of pharmaceuticals, including protein and peptide manufacturing and cell line development capabilities.

In November, Hospira also formed an alliance with German-based STADA Arzneimittel AG and BIOCEUTICALS Arzneimittel AG.

A large purchase was set in motion at the end of 2006 and came to fruition in February 2007, when Hospira completed its acquisition of Australia-based Mayne Pharma Ltd. for approximately $2 billion in cash. Mayne will offer Hospira numerous oncology products, among others, to the company’s portfolio and expand the company’s presence globally, the company said. Operating under the Specialty Injectable Pharmaceuticals division, this acquisition will contribute half of the division’s sales moving forward, according to Begley. In addition, it is projected double sales outside the United States.

Thus far, 2007 is shaping up to be a good year for the company. Hospira forecast 2007 sales in the range of $3.4 billion to $3.48 billion. In a call to analysts in late February, the company said it expected sales of its infusion therapies to grow by 3% to 4%, but even more impressively, it forecasted sales of medication management systems to grow by about 20% by the end of the year.

For the first quarter of 2007, ended March 31, the company already showed signs of its newfound strength, having grown net sales 17.8% to $782.8 million compared with $664.3 in the same period in the prior year.

Product launches have been implemented to help the company achieve its goals. In April 2007, the company launched a new wireless platform for its medication infusion devices, including its Plum A+ single-channel infusion device and plans to add it to its Plum A+ 3 triple-channel device, LifeCare PCA patient-controlled analgesia system and Symbiq infusion system later this year.

“Hospira’s year is off to a good start,” Begley said. “We continued to advance the business during the quarter and remain on track with our earnings expectations for the full year. We continue to believe that 2007 will mark another year of significant progress for Hospira, as we build on the momentum we’ve created by executing our growth strategies.”

$2.6 Billion ($41.3B Total)
No. of Employees: 13,000

As Hospira continues to evolve in its transition to reaching full independence from Abbott Laboratories—Hospira turned two in April—the company is on the upswing. With $2.6 billion in net sales in 2005, the company had some flat numbers compared with 2004; however, first-quarter 2006 numbers already show a rebound with a slight increase in earnings, and analysts are speculating that the company will probably see improving margins and better growth rates.

The global specialty pharmaceutical and medication delivery company views its progress with optimism as it hopes to steadily increase its pace in 2006 and beyond. Hospira CEO Christopher Begley described 2005 as a “transformative” year and added, “We continue our transformation from a position of strength,” he said. “Our success since the spin-off has been due to focus, hard work and, yes, a little luck.”

Last year, the company faced the huge task of transitioning from its separation from Abbott in 2004 while driving cultural change in-house and growing sales and revenue. To help solidify independence, Hospira built a 190,000-square-foot R&D facility in Lake Forest, IL, established three of four regional headquarters (Canada, Latin America and Europe) and created a standalone information technology infrastructure.

To improve cash flow along the way, in May 2005 Hospira sold its Salt Lake City, UT-based manufacturing facility to California-based ICU Medical, which assumed responsibility for manufacturing some of Hospira’s critical care products. Hospira also closed its Donegal, Ireland facility and plans to close facilities in Ashland, OH and Montreal sometime in 2007 and 2008, respectively. Furthermore, production will be phased out of the North Chicago facility (currently leased from Abbott) by the end of 2009, earlier than the 2014 lease expiration. Manufacturing operations at all these locations will be transferred to other Hospira facilities or outsourced to third-party suppliers.

While all these closings are occurring, some other new facilities have been added to the roster, including one in Clayton, NC and an expansion in an existing location in McPherson, KA. In all manufacturing locations, Hospira has been steadily implementing Lean manufacturing and Six Sigma programs to improve quality and productivity.

As the company invested 16% more in R&D funding in 2005—spending a total of $139 million—it helped push along items such as a wireless version of the Hospira MedNet safety software for the company’s Plum A+ general infusion pump and Plum A+ 3 (triple-channel) pump.  The original MedNet system was launched in December 2003 and, by the end of the 2005, was estimated by Hospira to have penetrated as much as 25% of the available market of the Plum A+ installed base.

Part of the company’s long-term growth strategy involves acquisitions and alliances. One acquisition last year was Physiometrix, a non-invasive device developer, leading to the launch of the SEDLine brain-function monitor, which helps evaluate the effects of anesthesia and sedation.

In more recent activity, Hospira acquired LifeCare PCA, a patient controlled pain medication delivery system, in February. In keeping with its reputation as a leading manufacturer of flexible intravenous (IV) equipment, Hospira launched the VISIV flexible IV container in April and expects to introduce more products available in the VISIV container in coming years.

Another acquisition involved the generic drug foscarnet. Even though the company has a range of medical devices in its portfolio, the pharmaceutical business is a major part of its strategy moving forward. In fact, 46 products are in the pipeline, with a heavy focus on new generic injectables. Hospira provides third-party contract manufacturing for hospital injectable pharmaceutical manufacturing.

The company’s US market remains the largest revenue generator, accounting for 83% of sales. Internationally, Hospira has a presence in 18 other countries and distribution relationships in 38 countries due to the completion of an agreement with Abbott regarding transfer of international operations. Hospira agreed to purchase the net operating assets of the hospital products international business for about $300 million over two years, and thus far, the company has paid about $250 million.

The recent launch of Hospira in the Netherlands in May served as a move to broaden the company’s reach in the international marketplace. A marketing and distribution alliance was also formed with Taiyo Yakuhin, a Japanese generic pharmaceutical manufacturer.

Hospira is currently projecting a 4%-6% growth in net sales for 2006.