San Clemente medical device maker ICU Medical Inc. is gearing up to open an Eastern European plant as part of a focus on more profitable, customized products for hospitals.
The $14 million, 100,000-square-foot plant in Slovakia is expected to open in the fourth quarter, according to Chief Financial Officer Scott Lamb.
ICU makes needleless connectors and other devices used to deliver intravenous fluids and drugs to patients in hospitals and other healthcare settings. It also makes products for delivering powerful cancer drugs.
The company’s devices, including the Clave needleless connector and the Tego, a catheter protector, are designed to guard healthcare workers from needle sticks and toxic chemicals.
ICU is opening the plant as part of a bid to gain market share in Europe. Global sales, led by Europe, make up about 20% of ICU’s $200 million-plus in annual revenue.
The company plans to make custom IV sets for European hospitals at the plant in western Slovakia.
Custom devices, including IV sets, critical care products and cancer devices are a growing business for ICU, with custom sets now making up about a third of its sales, according to founder and Chief Executive George Lopez.
Last year, sales of custom products rose 13% from 2008 to $78.6 million.
The Slovakia plant is set to shorten the time it takes ICU to get custom sets to European customers, Lamb said.
ICU now supplies European customers from a Mexican plant, and it takes “six weeks to get across the ocean,” he said.
When the Slovakia plant opens, ICU should be able to get them to European buyers in 14 to 21 days with rush orders being done in three days, Lamb said.
The company plans to open the plant with about 100 jobs and expects to add an unspecified number of jobs within about 12 months of opening.
The company picked Slovakia because of its central location, “relatively low labor and tax rates” as well as political and economic stability, Lamb said.
ICU also has operations in Italy and Germany. They won’t be affected by the Slovakia plant opening.
Workers at the Italian plant assemble IV therapy devices, according to ICU’s latest annual report. The company makes IV sets and compounders in Germany.
The Slovakia plant is designed to meet Food and Drug Administration standards, Lamb said.
The expansion is part of the device maker’s ongoing effort to reduce its dependence on dominant customer Hospira Inc., a Lake Forest, Ill.-based drug and device maker.
Hospira’s been a key customer for ICU for more than 15 years, dating back to its days as part of Chicago-area drug and device maker Abbott Laboratories.
ICU got 53% of its 2009 sales of $231.5 million from Hospira.
“The stock market (and) our investors perceived the company as being vulnerable if too much of (our) sales are with one company,” Lopez said in an interview last year. “I recognized that (we) had to diversify to decrease (our) risk somewhat.”
ICU eventually expects to cut its dependence on Hospira to 40% to 45% of revenue, Lopez said.
Along with custom devices and other products, ICU has expanded into what Lopez has called “empty markets,” such as protecting healthcare workers administering cancer drugs.
ICU has relatively few competitors because it tends to pick markets that aren’t necessarily served by other device makers, according to Lopez.
Competitors include B. Braun Medical Inc., a division of Germany’s B. Braun Melsungen AG with some 1,300 Orange County workers, Becton Dickinson & Co. of Franklin Lakes, N.J., and Baxter International Inc. of suburban Chicago.
