Germany’s Fresenius (NYSE:FMS) and Britain’s Smiths Group (LON:SMIN) have emerged as the final bidders for Pfizer‘s (NYSE:PFE) infusion pump business, inherited via the Big Pharma’s September 2015 purchase of Hospira for $15 billion. The winning bid is expected to be around $1.5 billion, according to Reuters.
Private equity firm Pamplona Capital Management was also interested and reportedly made a 2nd-round bid in April, when the estimated price tag for unit was $2 billion, according to Bloomberg.
During the 1st 3 quarters of 2014, Hospira’s medication management unit, including intravenous drug-delivering infusion pumps and related services, accounted for $3.3 billion in net sales, or 19% of the company’s total.
Pfizer, which acquired Hospira to increase its presence in the nascent market for biosimilar drugs, had initially planned to keep the device unit before a series of setbacks caused it to change its mind.
“We believe that Hospira has a leading pumps and consumables business, which differentiates them from the competition, which will provide Pfizer with novel capabilities in an adjacent area and a new source of revenue growth,” Pfizer group president of established pharma, John Young, said last year when the deal was announced.
But last August the FDA told hospitals to stop using the company’s Symbiq infusion system, marking the 1st time the agency encouraged the transition away from a medical device due to poor cybersecurity. The agency said the Symbiq can be remotely accessed by hackers, allowing the unauthorized user “to control the device and change the dosage the pump delivers, which could lead to over- or under-infusion of critical patient therapies.”
The Symbiq was already discontinued at the time, but independent researcher Billy Rios, who initially warned of the safety issue, has said Hospira’s current-generation LifeCare PCA pumps suffer from similar vulnerabilities. The FDA concurred, but did not recommend stopping use of those devices.
Prior to the cybersecurity scare, Hospira’s infusion pump business was plagued by other regulatory issues, including an importation ban on infusion pumps made at a facility in Costa Rica, which was lifted in January 2015.
In addition, Pfizer has a history of ridding itself of non-core business. The company spun off its animal health unit, creating Zoetis in a 2013 IPO worth $2.2 billion. It’s also sold off many of its consumer health products over the years, some of which were also inherited via acquisition.
Smiths Group’s device arm, Smiths Medical, already sells a variety of infusion pumps, according to the company’s website. Meanwhile Fresenius has expertise in intravenous therapies due to its focus on providing products and services, such as dialysis, to patients with chronic kidney failure.