Hospira's portfolio of products is composed of five main product lines:
• Specialty Injectable Pharmaceuticals;
• Medication Delivery Systems;
• Injectable Pharmaceutical Contract Manufacturing;
• Other; and
• International.
Specialty Injectable Pharmaceuticals
The specialty pharmaceutical industry includes manufacturers of generic pharmaceutical
products as well as manufacturers whose proprietary products are focused on
a specific patient population or therapeutic area. Generic pharmaceutical companies
provide lower-cost alternatives to branded pharmaceuticals whose patents have
expired. The two largest segments of the generic pharmaceutical market are oral
and injectable dose forms.
Generic injectable pharmaceuticals are sold primarily to hospitals as well
as to other customers across the continuum of care. Significantly higher levels
of expertise and investment are required for injectable pharmaceutical manufacturing
than for oral dose pharmaceutical manufacturing. Hospira believes that, due
to the higher level of required investment and expertise, product margins are
generally more sustainable, product life cycles tend to be longer compared to
oral dose generic pharmaceuticals and there are fewer competitors.
Hospira has more than 130 generic injectable products in more than 600 dosages
and formulations. Hospira's product areas include cardiovascular, anesthesia,
anti-infectives, analgesics, emergency and other. All of Hospira's generic injectable
pharmaceuticals include unit-of-use bar code labels that can be used to support
medication management efforts. Hospira procures the active pharmaceutical ingredients
in its products from third-party suppliers.
Hospira's specialty injectable pharmaceutical product portfolio includes Precedex®
(dexmedetomidine HCl), a proprietary sedative that is used most commonly in
critical care units. Precedex® is a registered trademark of Orion Corporation
and is licensed to Hospira by Orion.
New generic products developed upon patent expiry of proprietary drugs drive
growth in the specialty injectable pharmaceutical market. A number of injectable
drugs with a total branded value of over $5 billion (excluding biologics) will
be facing patent expiry in the United States by the end of the decade. Hospira
intends to invest in its business to increase the number of first-to-market
generic injectable drugs in its portfolio and to build its injectable drug portfolio
through internal development as well as through strategic relationships with
third parties that expand its technology capabilities and its ability to offer
innovative products. In July 2004, Hospira launched the generic fluconazole,
an anti-fungal, on the date of its patent expiration and initially captured
an estimated 40% of the fluconazole injectable market. During 2004, Hospira
also launched another generic injectable drug, deferoxamine mesylate, which
is used in the treatment of acute iron intoxication.
Novel drug delivery formulations and formats are key points of product differentiation
for generic injectable pharmaceuticals. Hospira offers a wide variety of drug
delivery options, and believes that its products enhance safety, increase productivity
and reduce waste for its customers. Hospira's drug delivery formats include
standard offerings in ampoules and flip-top vials, which clinicians can use
with standard syringes. Hospira's proprietary drug delivery options include
Carpuject® prefilled syringes, patient-controlled analgesia syringes for use
with its LifeCare PCA® II and LifeCare PCA® 3 Infusion Systems, Ansyr® prefilled
needleless emergency syringe systems, First Choice® premixes and the ADD-Vantage®
System.
Carpuject®. The Carpuject® injectable system consists of prefilled cartridges
that are loaded into a syringe holder to create a drug delivery system. Carpuject®
prefilled cartridges minimize waste and decrease the incidence of dosing errors.
The Carpuject® system is compatible with any connection port. The Carpuject®
unit-of-use cartridge, tamper-resistant packaging and bar-coded labels enhance
tracking and control of opioid analgesics and other controlled medications.
First Choice®. First Choice® premixed formulations are ready-to-use medications
that are stable in aqueous solution at the concentration required for infusion
therapy. These products generally decrease preparation time in the hospital
pharmacy and speed delivery of the drug to the patient.
ADD-Vantage®. Not all medications are stable in aqueous solution at the concentration
required for infusion therapy. The ADD-Vantage® system is a closed, sterile
system that is used to rapidly and efficiently prepare drug solutions from pre-packaged
drug powders or concentrates. The ADD-Vantage® system features an inner stopper
that keeps the drug and diluent separated until the system is activated to permit
the rapid mixing of drug and diluent. The ADD-Vantage® system can be prepared
in the hospital pharmacy or at the patient's bedside. Drug vials can be stocked
in automated dispensing machines and diluent containers can be stored on the
nursing floor so that they will be immediately available to clinicians. This
system reduces errors and decreases dispensing time and drug waste.
Wind-down of Berlex Agreement
Within the United States, Hospira distributes the imaging agents Magnevist®
and Ultravist® through a distribution agreement with Berlex, Inc., which will
expire during 2005. Magnevist® and Ultravist® are registered trademarks of Berlex,
Inc.
During the fourth quarter of 2004, Hospira received notification from Berlex
that it was exercising the "wind-down" clause in its agreement with
Hospira to distribute Berlex's imaging agents. The contract contains a provision
that enables Berlex to begin shifting distribution of its products from Hospira
to another party prior to the expiration of the contract. The parties disagree
as to when the wind-down period commenced. Berlex has initiated the alternative
dispute resolution provision of the contract to resolve this disagreement. The
parties have met and are discussing alternatives to resolve the dispute.
Medication Delivery Systems
The subgroups of the medication delivery systems market Hospira serves are
(1) medication management systems, which include electronic drug delivery pumps
and related software, administration sets and accessories, and (2) infusion
therapy products that are used to deliver I.V. fluids and medications to patients
who are being treated in a hospital or hospital-like setting.
Hospira believes that the vast majority of patients treated in hospitals receive
I.V. fluids or medications during their hospital stay. In addition, patients
who are severely ill or have undergone extensive surgical procedures may require
treatment with multiple I.V. medications and fluids, either simultaneously or
sequentially. For example, coronary artery bypass patients may receive between
eight and twelve medications delivered through two or three electronic drug
delivery systems to maintain fluid volume and stabilize blood pressure, control
pain, prevent infection and regulate heartbeat. Hospira's products are also
used in clinics, home healthcare and other sites across the continuum of care
where I.V. administration of fluids and medications is required.
Key product innovations in Hospira's Medication Delivery Systems product line
include its next-generation patient-controlled analgesia device, LifeCare PCA®
3 (2003); the Plum A+® Multichannel Infusion Pump (2002); and the Hospira MedNet™
Software for its Plum A+® Infusion System (2003).
Medication Management Systems
Medication management systems include electronic drug delivery pumps and administration
sets that are used to deliver I.V. fluids and medications. Hospira's systems
consist of a reusable electronic drug delivery pump and related software and
disposable administration sets that are designed to fit a specific pump model.
Worldwide, Hospira estimates that more than 400,000 of its electronic drug delivery
pumps are currently in use.
Electronic drug delivery pumps differ in their method of fluid delivery and
their compatibility for use with ambulatory or non-ambulatory patients. Accuracy,
precision and reliability are key product requirements. Products are differentiated
by ease of use, clarity of user interface, system capabilities, weight, cost
and service requirements. Electronic drug delivery pumps with enhanced systems
capabilities have become a key control point in efforts to improve medication
management programs and decrease the incidence of medication errors.
Hospira's current generation of electronic drug delivery systems includes the
products described below.
Plum A+®. The Plum A+® Infusion System is a stationary multi-channel pump with
software and display features that have been designed to reduce drug administration
errors and promote safe and on-time delivery of medications. Launched in 2000,
the Plum A+® is a general purpose infusion platform that manages critical medications
and complex dosing regimens by enabling clinicians to time and deliver a sequence
of programmed volumes of I.V. medication doses through its control of two medication
infusion channels for either sequential or concurrent infusion protocols. The
Plum A+® calculates drug-appropriate doses, displays key programming information
and provides a pre-infusion review of programmed medication infusion parameters
for clinician confirmation.
LifeCare PCA® 3. The LifeCare PCA® 3 Infusion System for patient-controlled
analgesia was introduced in 2003. It utilizes a stationary single-channel pump
and incorporates a built-in bar code reader to automatically identify the drug
name and drug concentration from the bar code labels on pre-filled drug vials.
The LifeCare PCA® 3 Infusion System automatically enters the drug name and concentration
into the pump programming sequence, thus reducing the number of manual entry
programming steps and the potential for entry errors.
GemStar®. The GemStar® Infusion System is an ambulatory, small, lightweight,
single-channel pump with advanced software for customized therapy configuration.
Its keypad and programming designs have been developed to improve the speed
and accuracy of clinician programming and data entry. The GemStar® can be configured
by the customer for use in multiple therapy options. These options include PCA
and administration of general I.V. solutions and I.V. nutrition. The GemStar®
can be pre-programmed by the nurse or pharmacist for use with a standard therapy
protocol or for use with a patient-specific protocol.
Omni-Flow®. The Omni-Flow® 4000 Plus Medication Management System is a stationary
multi-channel pump with advanced software that manages and synchronizes the
infusion of drugs through four channels that can be programmed for sequential
or concurrent infusion. Its patented multi-drug management capabilities promote
the safe and on-time delivery of medication and reduce drug administration errors.
The Omni-Flow® System is widely used to administer complex drug therapy protocols,
such as those for bone marrow transplantation, oncology and cardiac anesthesiology.
Hospira MedNet™ System
To increase patient safety and decrease the incidence of medication errors,
as well as their associated costs, Hospira is utilizing information technology
to develop medication management systems that are focused on ensuring that the
right drug is given to the right patient, in the right dose, through the right
route of administration, at the right time. Increasingly, software is being
developed for these needs. Hospira has increased its investment in medication
management systems product development.
The Institute of Medicine reported in a study published in 1999 that an estimated
98,000 deaths occurred annually due to medical errors in U.S. hospitals and
that 7,000 of these deaths were attributable to errors in medication administration.
The same study estimated that the associated economic burden of medication administration
errors was approximately $77 billion.
Results from national surveys of hospital leaders indicate an increased need
for information technology solutions that address patient safety and reduce
errors in medication administration.
Hospira believes that electronic documentation of care delivery and information
technology solutions that improve clinician productivity are of significant
interest to hospitals.
The Hospira MedNet™ System, or "MedNet," has been designed to provide
customers with drug information and decision support capabilities in a framework
that can be used to create clinical decision policies and safety rule sets for
clinicians at the point of care. MedNet has been designed to be eventually compatible
with the majority of Hospira's line of electronic drug delivery pumps. MedNet
was launched in December 2003 and Hospira believes it had penetrated approximately
20% of the available market of the Plum A+ installed base by December 2004.
The drug library in MedNet currently can be customized for up to 12 different
clinical care areas, including intensive care units, emergency rooms, anesthesia
and pediatrics. Drug listings can be prioritized by each clinical care area
according to its standards.
MedNet allows hospitals to define dose limits for up to 1,200 medications.
MedNet offers both "soft" and "hard" dose and rate-setting
limits for both primary and secondary infusion. Soft limits allow a clinician
to manually override dose limits if the clinician requires delivery of a larger
or smaller dose than what is recommended by the clinician's hospital's best
practice guidelines. As an added safety feature, MedNet also allows hospitals
to set hard limits that clinicians cannot manually override. The limits apply
to drugs that are delivered through all programmable infusion channels, including
single drug as well as multiple sequenced and concurrent drug infusions.
Clinician confirmation is required before any medication infusion program can
be activated. If a clinician makes a device programming error, the system will
provide a warning, signaling that the program is outside the recommended limits
of the hospital's best practices and protocols. If the entry is outside of the
hard limits, the system will prevent the clinician from activating the device.
MedNet maintains a history of all alarms and alerts that are generated from
clinician programming outside of the best practice limits. It enables hospitals
to track trends in their quality assurance programs and assists in their efforts
to continuously improve standards of care.
Hospira is committed to market leadership in infusion therapy patient safety
and medication management solutions. Hospira is currently developing "intelligent"
bedside medication management systems that expand on MedNet. New designs are
expected to utilize bar-coding technology to confirm patient identity as coded
on a patient's wristband identification tag and record the identity of the clinician.
These technology solutions will link the bar-coded information with electronic
drug delivery infusion pumps, the patient record, the physician order and data
from various other hospital information systems to create medication administration
records that can be integrated into the patient record. By centralizing, integrating
and continuously updating information from multiple sources, these technology
solutions can "close the loop" on medication management and reduce
medication administration errors.
During 2004, Hospira received regulatory clearances from the U.S. Food and
Drug Administration for its wireless network versions of MedNet for Plum A+®
and MedNet for the LifeCare PCA® patient-controlled analgesia pump. As a result,
Hospira can test, and eventually market and sell, these products in the United
States. These products are scheduled to launch in the United States in 2005.
Infusion Therapy Solutions and Supplies
Hospira offers a broad product line of infusion therapy solutions and supplies
that includes I.V. solutions for general use, I.V. nutrition products, a synthetic
plasma volume expander and solutions for irrigation. All of Hospira's injectable
I.V. solutions include unit-of-use bar-code labels that can be used to support
medication management efforts. Infusion therapy supplies include catheters,
connectors, cannulas and administration sets used to deliver intravenous therapy.
Hospira's line of infusion therapy supplies includes administration sets used
in gravity I.V. administration, I.V. catheters and safety devices that are used
to facilitate delivery of I.V. fluids and medications without the use of needles.
General I.V. Solutions. Intravenous solutions are used to replace body fluids
and electrolytes that have been lost due to illness, injury or surgical procedures
as well as to deliver I.V. medications. These fluids are delivered to the patient
through administration sets using an electronic drug delivery pump or by gravity
flow. Examples of general I.V. solutions are saline and dextrose solutions.
Hospira also sells Hextend®, a synthetic plasma volume expander, for use in
clinical conditions where fluid replenishment with a general I.V. solution is
not sufficient.
I.V. Nutrition Products. Hospira's I.V. nutrition products are sold under the
brand names Aminosyn®, Liposyn® and First Choice® Micronutrients. These products
are used as supplements or to provide complete nutritional support to a patient
who is unable to take nourishment from the usual oral route or has a non-functioning
gastrointestinal tract due to major surgery, serious burns, chemotherapy treatments,
or major gastrointestinal or inflammatory diseases. Intravenous nutritional
products can provide the patient's complete requirements for protein and calories
on either a temporary or an extended basis.
Irrigation Products. Irrigation products are sterile solutions of saline or
water used to wash wounds and cleanse surgical sites.
Needlestick Safety Products. Protection of healthcare workers from needlestick
injury and blood exposure is a key concern of hospitals. According to a 1999
study by the Centers for Disease Control and Prevention, U.S. healthcare workers
experienced approximately 600,000 to 800,000 needlestick accidents each year.
These exposures can lead to infection with bloodborne bacteria or viruses that
cause severe acute or chronic diseases. Annual treatment costs for needlestick
injuries have been estimated at approximately $1 billion. The Needlestick Safety
and Prevention Act of 2000 requires hospitals to record and evaluate needlestick
injuries and to use needleless or protected needle products to help reduce healthcare
worker injuries and illnesses caused by needlesticks.
Hospira offers needlestick safety products and programs to support its customers'
needlestick safety initiatives. LifeShield® CLAVE® and MicroCLAVE® connectors
are one-piece valves that directly connect syringes filled with medications
to a patient's I.V. line without the use of needles. ICU Medical's CLAVE® connectors
are a component of administration sets sold by Hospira to its customers in the
United States and select markets outside the United States.
Injectable Pharmaceutical Contract Manufacturing
Hospira provides contract manufacturing services for formulation development,
filling and finishing of injectable drugs in North America. Hospira works with
its customers to develop stable injectable forms of their drugs, and Hospira
fills and finishes those and other drugs into containers and packaging selected
by the customer. The customers then sell the finished products under their own
labels. One 2 One™ serves numerous customers, including many of the largest
global pharmaceutical companies.
Key criteria that are used by pharmaceutical and biotechnology companies in
selecting contract manufacturers include the demonstrated ability to consistently
meet regulatory standards, a solid financial profile, technology leadership
and an ability to provide access to comprehensive capabilities. One 2 One™ does
not manufacture active pharmaceutical ingredients, but can provide a wide range
of filling and finishing services, including solutions preparation, sterile
filling, lyophilization, terminal sterilization and packaging. Client companies
can choose from a variety of delivery systems that includes small- and large-volume
parenterals, flexible containers, pre-filled syringes and drug delivery cartridges.
One 2 One™ also provides expertise in formulation development, analytical development
and regulatory services.
Demand for injectable pharmaceutical contract manufacturing services is driven
by new drug development. Industry sources have projected that approximately
300 new injectable drugs could be approved in this decade and that manufacturing
of more than half of these drugs may be outsourced.
Other
Other is primarily comprised of sales of Hospira's products to alternate site
providers, such as clinics, home healthcare providers and long-term care facilities,
as well as sales of critical care devices.
Critical Care Devices
Critical care devices are used to monitor vital signs as well as specific physiologic
functions of key organ systems. Hospira provides hemodynamic monitoring systems
that are used to monitor cardiac function and blood flow in critically ill patients.
Transpac®. Hospira's Transpac® products are disposable pressure-sensing devices
that provide accurate and reliable continuous blood pressure readings and show
the immediate effect of fluid management and drug administration. Most commonly,
these products are used on patients with suspected pulmonary disease or cardiovascular
dysfunction.
Safeset.™ Hospira's Safeset™ Blood Sampling System provides the clinician with
a convenient, needleless method to obtain a patient's blood sample and to administer
I.V. fluids or drugs in conjunction with blood pressure monitoring devices.
Use of the Safeset™ Blood Sampling System protects the clinician from exposure
to bloodborne pathogens and reduces the risk of I.V. line contamination.
Catheters. Hospira's advanced sensor pulmonary artery catheters are used to
measure cardiac output and blood oxygen levels. The Opticath™ family of fiber-optic
catheters is used to provide continuous monitoring of mixed venous oxygen saturation,
blood pressure and cardiac output. Hospira's fully integrated Q2+™ System includes
the new Q2+™ mixed venous oxygen saturation and continuous cardiac output monitor
and OptiQ® Disposable Pulmonary Artery Catheter. Other advanced sensor catheter
systems include Hospira's Oximetrix® 3 System that provides continuous monitoring
of blood oxygen saturation levels and the Q-Vue™ System that provides continuous
monitoring of cardiac output.
Hospira also sells a line of standard hemodynamic monitoring catheters that
includes central venous and pulmonary artery catheters, as well as a line of
angiography kits that are used in the cardiac catheterization laboratory and
suction products that are used to collect fluids in the operating room.
In February 2005, Hospira entered into a strategic manufacturing, commercialization
and development agreement with ICU Medical, Inc. for Hospira's critical care
product line. In connection with the transaction, ICU agreed to purchase Hospira's
Salt Lake City, Utah manufacturing facility. After the closing, ICU will manufacture
the critical care products currently produced at the plant. Hospira will continue
to sell the critical care products under its brand, and perform related sales,
marketing, customer contracting, customer service and distribution functions.
The closing of the transaction is subject to customary conditions and is expected
to occur early in the second quarter of 2005. Both parties have implemented
a planning process for, and expect to carefully manage, the transition of manufacturing
of these products from Hospira to ICU. However, there can be no assurance that
the transition of manufacturing will not disrupt the supply of these products
on a short-term basis.
International
Internationally, Hospira's products are similar to those offered in the United
States. Hospira is currently working to establish its own business infrastructure
to support its international operations. Hospira relies on Abbott to provide
various services to support Hospira's international operations for a two-year
transition period following the spin-off and has agreed to purchase certain
international assets, and assume the related liabilities, from Abbott over the
transition period as described below under "—Arrangements With Abbott—International
Agreements."
Hospira is assessing its product portfolio and international markets on a country-by-country
basis in an effort to determine those countries that provide the greatest potential
for Hospira's business. Hospira intends to establish a direct commercial infrastructure
in countries that offer the most potential, while offering products through
distributors in other countries. Hospira expects to exit certain other countries
altogether. Hospira believes that it will commence operations on a stand-alone
basis in certain countries beginning in 2005. To support its international operations,
Hospira plans to establish international regional hubs in Amsterdam, The Netherlands;
Montreal, Canada; and Mexico City, Mexico, in 2005; and Osaka, Japan, in 2006.