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Deals Bring Company Shifts, Demographics Drive Growth

Deals and demographics stand to play out at Orange County healthcare companies next year.

Early on, the county is set to lose a big corporate headquarters once UnitedHealth Group Inc.’s $8.3 billion buy of Cypress-based PacifiCare Health Systems Inc. wraps up.

PacifiCare won’t go away entirely,UnitedHealth is set to keep it as a unit with Chief Executive Howard Phanstiel and others staying on.

The health plan provider and its rivals will be busy pushing their Medicare drug plans. PacifiCare is spending $50 million to promote its drug plans.

The other healthcare deal in the works stands to augment Irvine-based Allergan Inc. The drug maker is paying $3.2 billion for Inamed Corp., a Santa Barbara maker of dermatology products, breast implants and surgical devices (see related item, this page).

The acquisition cleared a hurdle last week when rival bidder Medicis Pharmaceutical Corp. of Scottsdale bowed out.

The other driver for healthcare companies: the nation’s aging population.

“With the aging population, there will be a natural increasing need,” said Michael Mussallem, chief executive of Irvine heart valve maker Edwards Lifesciences Corp. “In terms of large trends, I think our industry, and Edwards in particular, will continue to experience a steady growth.”

Edwards enters 2006 with plans to restart clinical trials for a less-invasive heart valve. Edwards and several of its rivals are banking on valves that don’t require major surgery for growth.

Beckman Coulter Inc., OC’s largest medical technology company, enters year two under Chief Executive Scott Garrett, who took over for longtime leader John Wareham in early 2005.

Beckman Coulter recently reworked its two business units into one division and cut some 350 jobs as part of a restructuring.

Costa Mesa-based drug maker Valeant Pharmaceuticals International, the county’s second largest drug maker after Allergan, is awaiting results of a key clinical test in early 2006.

Viramidine, Valeant’s next-generation hepatitis C drug, has been the subject of speculation among company watchers, mainly because of mixed results during earlier trials.

Valeant could launch a pair of drugs next year,Zelapar for Parkinson’s disease and Cesamet, which is used to fight nausea and vomiting in chemotherapy patients.

Cooper Cos., a Lake Forest maker of contact lenses and surgical devices, could be in for a more restrained year as it digests its 2005 acquisition of rival Ocular Sciences Inc.

The company has told Wall Street to expect lower profits and sales in 2006.

“Product introductions during 2006 are aimed at growing our revenue and stabilizing our market share,” Cooper said with the release of its recent quarterly results.

Among hospitals, UCI Medical Center in Orange is awaiting the results of a panel’s probe into a liver transplant controversy. The issue led Michael Drake, chancellor of the University of California, Irvine, to put the teaching hospital’s chief executive, Ralph Cygan, on administrative leave.

For employers, 2006 appears to be another year of higher premiums for their workers’ healthcare.

A study from Mercer Human Resource Consulting LLC shows OC employers and others in Southern California expect to see a 6% increase in their health premiums, compared to a 7.2% hike this year.



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PERSON TO WATCH: DAVID PYOTT






Pyott: could turn Allergan into dominant medical cosmetics player

The longtime leader of one of Orange County’s most valuable companies enters 2006 as the winner of a tug-of-war for Inamed Corp.

The deal stands to transform Allergan Inc. into a dominant provider of medical cosmetics,wrinkle reducers, breast implants and devices used in weight reduction surgeries.

Out of regulatory concerns, Allergan won’t be keeping Inamed’s wrinkle-reducer drug candidate,a potential rival to its own blockbuster Botox.

But Inamed brings Allergan a complete facial lineup with Botox for the brow and dermal fillers for the lower face.

David Pyott should have more on his plate in 2006.

He and Allergan could get word from the Food and Drug Administration on whether they will gain approval for Botox as a treatment for migraines.

,Vita Reed



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COMPANY TO WATCH: DEVAX INC.

Irvine heart device startup Devax Inc. enters 2006 with a war chest of funding and plans to do a clinical trial and global marketing of its lead product.

Devax makes the Axxess drug-coated stent for treating heart and vessel ailments. The company just raised $32 million in a fourth round of venture financing in early November, bringing its total raised to $48.4 million in six years.

The company is a long way from selling Axxess in the U.S. Devax has plans to start clinical trials in the second half of 2006, after filing an investigational drug application with the Food and Drug Administration. Product approval could come in 2007.

Devax is planning to launch Axxess in Europe in the second half of 2006 after getting clearance there for the device in 2003.

,Vita Reed

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