PacifiCare Health Systems Inc. could plant a Medicare-related distribution center in the heartland.
The Cypress-based company recently said it is considering Overland Park, Kan., for a mail-order distribution plant that could employ up to 850 people.
The unit would be operated by the health plan provider’s Costa Mesa-based Prescription Solutions unit, which manages PacifiCare’s drug benefit operations.
The Kansas City Star reported the news late last month. Prescription Solutions, according to the paper, is set to propose opening a distribution center in the Kansas City suburb in return for $10.6 million in state and local tax incentives, including a cut in property taxes from city officials.
Cheryl Randolph, a PacifiCare spokeswoman, told the Business Journal that a decision on the new facility’s location hasn’t been made. PacifiCare is considering other possible locations outside of California, she said.
The Kansas Department of Commerce identified Prescription Solutions in the article, though the company was hoping to keep things quiet until an official announcement was made.
Overland Park officials said if Prescription Solutions comes to the area, the unit could invest up to $50 million and employment would eventually rise to 1,300 jobs from the initial 850.
Prescription Solutions is looking to set up another drug distribution plant because of rising demand for prescriptions, as well as an expected spike in demand from the pending introduction of Medicare Part D in 2006.
PacifiCare long has offered Medicare health plans through its Secure Horizons brand, and was among the companies that lobbied Congress for more funding.
Prescription Solutions’ facilities include a pair of mail-order distribution centers just across the Orange County line in Carlsbad. Those plants wouldn’t be affected by the expansion, PacifiCare said.
Prescription Solutions is one of PacifiCare’s fastest-growing businesses. In the fourth quarter, its revenue grew to $194 million, up 47% from a year ago.
A day after the news about the distribution hub broke, the Overland Park City Council agreed to move forward with a proposal to give property tax breaks to Prescription Solutions, the Kansas City Star reported.
But a consultant for the company, Joe Lacy, reminded Overland Park officials that Prescription Solutions still was looking at several other locations.
Lacy, who works for Stadtmauer Bailkin Biggins LLC of New York and Princeton, N.J., said in published reports that Prescription Solutions was looking at fewer than 10 potential locations and that Overland Park was on a short list.
According to Lacy, Prescription Solutions is evaluating regulatory issues, the local business environment and the quality and availability of local workers.
Weathering the Storm
ICU Medical Inc., a San Clemente medical device maker, has had a nice rally on Wall Street of late.
Last month the company posted first-quarter earnings that beat Wall Street expectations. Revenue in the period rose 22% to $27 million, thanks to increased sales of its core Clave needle-free device.
ICU posted net income of $4.4 million in the first quarter, compared with a profit of $4.1 million on sales of $22.2 million a year earlier. Analysts were looking for about $3 million of net income and sales of $22.1 million.
The device maker also said that a looming issue with its core customer, Hospira Inc. of Lake Forest, Ill., is in the past. ICU’s shares were slapped severely last year after Hospira cut its buying of ICU products.
“The first quarter of 2005 is the best quarter we have had in a year and is a clear sign that the effect of Hospira’s inventory reduction in 2004 is behind us,” said Chief Financial Officer Francis O’Brien in a statement.
O’Brien also said that sales of Clave, ICU’s flagship needle-free system to deliver intravenous fluids, both to Hospira and other channels, “were all up significantly.”
Bits and Pieces:
Mauricio Flores, a partner in McDermott, Will & Emery’s Irvine office, appeared before the U.S. Supreme Court on behalf of Integra LifeSciences Ltd., a Plainsboro, N.J.-based company. The nation’s highest court is being asked to clarify circumstances under which researchers may use patented technology when conducting drug discovery activities. The case is related to a patent battle between Integra and a German company, Merck KgaA … Peregrine Pharmaceuticals Inc., Tustin, released data showing that an equivalent to its Tarvacin tumor-fighting antibody drug candidate, combined with radiation, reduced lung tumor growth by more than 95% … Hoag Memorial Hospital Presbyterian, Newport Beach, is sponsoring Physicians Practice, a publication aimed at doctors. Physicians Practice, which is based in Glen Burnie, Md., distributes magazines to more than 300,000 practicing doctors in the U.S. StrataCare Inc., Irvine, said it inked a deal to bring First Health Network, a national workers’ compensation plan provider to its clients. First Health is a unit of Bethesda, Md.-based Coventry Health Care. StrataCare provides software to workers’ compensation payers, along with electronic and mail-in bill review services.
