Pfizer Rumored to be Selling Its Hospira Pumps Division, With Smiths Group, Fresenius SE and Pamplona Capital Bidding
May 2, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Over a year ago, New York-based Pfizer acquired Lake Forest, Ill.-based Hospira for about $17 billion. In January of this year, it was rumored that Pfizer was considering selling the pumps and devices business that it picked up as part of the deal. Estimates were that the division could bring in about $2 billion.
Now insiders are saying that Smiths Group Plc and Fresenius SE are two of several bidders for the pumps and devices business. Also, Pamplona Capital Management, a private equity firm, made a second-round bid for the unit. Final bids are expected near the end of May.
Hospira develops and markets injectable drugs and infusion technologies. For some time the company’s devices unit has struggled. In May 2013, Hospira launched a strategy of phasing out older infusion pumps and launching newer products, including its Sapphire pumps, as a way of boosting business. The U.S. Food and Drug Administration (FDA), however, had issues with the company’s infusion pump manufacturing facilities, which placed a ban on one of the facilities. That ban was eventually lifted in 2014. And in August of 2015, the FDA put a block on hospital sales of Hospira’s Symbiq Infusion System because of concerns over cybersecurity.
An acquisition of the unit by any of the three companies would make a certain amount of sense. Pamplona Capital Management announced in November 2015 that it acquired MedAssets, a healthcare performance improvement company that serves four out of five U.S. hospitals.
Smiths Group PLC, headquartered in London, UK, is a global technology company. It has major products and services that include threat and contraband detection, medical devices, energy and communications. Smiths Medical division is a supplier of specialty medical devices and consumables. The division alone employs 7,950 people and reported 2015 annual revenue of 836 million pounds. Infusion systems account for 32 percent of its revenue.
The Telegraph reported today that, “It is understood that talks are only at an early stage and there is no certainty an agreement will be reached, though one source described the former Hospira business as a ‘very good fit’ for Smiths Group’s portfolio, though warned a deal was a long way down the pipeline.”
“Acquiring something from Pfizer —perhaps just pumps—would now be a very ambitious move,” said Sandy Morris, an analyst with Jefferies, to The Telegraph. “It would likely require a change of mindset from shareholders, but maybe an ambitious Smiths would be welcomed after a hiatus that lasted eight years.”
Fresenius SE & Co. KGaA is based in Bad Homburg, Germany, and is most well known for dialysis machines and services. The company reported 28 billion euros in revenue in 2015.
Infusion pumps are complex and highly computerized. They are programmed and designed to delivering specific amounts of drugs directly into a patient’s bloodstream. The worldwide global infusion pump market is projected to have a compound annual growth rate (CAGR) of 5.8 percent from 2015 to 2020, with an eventual market value of $10.2 billion by 2020.
The biggest competitors in the infusion pump market include CareFusion Corporation, Baxter International , B. Braun Melsungen AG, Fresenius, Hospira, and Medtronic .