Orange County’s big healthcare companies have a lot on their plates going into next year.
Lake Forest-based Cooper Cos. could start 2005 as the third-largest maker of contact lenses, up from fourth, if its $1 billion buy of Ocular Sciences Inc. wraps up this month as expected.
Cooper spooked investors last week when it restated some earlier results and lowered its guidance for the next three years, due to an accounting change for convertible debt.
Advanced Medical Optics Inc., the Santa Ana maker of eye surgery products and contact lens products, has its hands full with an acquisition. In a deal set to close in the first quarter, Advanced Medical is paying $1.3 billion for Visx Inc., a Santa Clara-based maker of laser vision correction devices.
The deal is the second big one for Advanced Medical since spinning off from Irvine-based Allergan Inc. in 2002 (see story, this page).
PacifiCare Health Systems Inc., the Cypress-based managed care company, is integrating its own large deal, a $500 million-plus buy of Green Bay, Wis.-based American Security Medical Corp. The deal, completed last week, is expected to boost PacifiCare in the market for preferred provider organization health plans.
In November, PacifiCare acquired Pacific Life Insurance Co.’s group health insurance business, adding an estimated 140,000 members to its rolls.
Diversifying PacifiCare is a running goal of Chief Executive Howard Phanstiel, who could continue the effort in 2005.
New leadership is on tap for others.
Beckman Coulter Inc., the Fullerton-based biomedical testing company, could have a new chief executive in 2005. Scott Garrett, Beckman’s president and chief operating officer, is in line to replace current Chief Executive John Wareham, who plans to retire next year.
Valeant Pharmaceuticals International, the Costa Mesa drug maker that evolved from ICN Pharmaceuticals Inc., enters 2005 with a new top dog,Timothy Tyson (see story, this page).
Tyson, who came to Valeant in 2002, is expected to continue the drug maker’s refined focus on new products. Building up sales in North America also is a goal.
St. Joseph Health System, the Orange-based nonprofit operator of three local hospitals, has a new chief executive in place, Deborah Proctor. Proctor succeeded longtime leader Richard Statuto in November (see story, page 1).
Irvine’s Edwards Lifesciences Corp. starts the year awaiting word from the Food and Drug Administration on when it can start an important clinical trial for its heart valve that doesn’t require major surgery. Edwards is seeking to get a jump on the market, which some believe now is led by 3F Therapeutics Inc., a smaller rival in Lake Forest.
Drug maker Allergan may hear from the FDA on whether its flagship Botox drug, which has usage ranging from wrinkle reduction to neck spasm treatment to excessive sweating, will gain the OK for treating migraine headaches.
Botox is expected to remain Allergan’s most important growth driver. Morgan Stanley & Co. raised its 2005 expectations for Allergan primarily because of Botox.
Next year should see some hospital expansions.
In Newport Beach, Hoag Memorial Hospital Presbyterian’s Women’s Pavilion is set to start taking its first patients in November. Hoag’s Women’s Pavilion has three operating rooms for caesarean sections, featuring electronic medical charts and patient security systems, 18 labor-delivery-recovery rooms and 42 postpartum beds, said Rick Martin, the hospital’s chief nursing officer.
The new tower also will have private rooms, and an 18-bed neonatal intensive care unit.
For most of the past couple of years, Medicare reform and what it meant to OC companies was one of the hotter issues. By contrast, 2005 is expected to be a rather calm year for Medicare because new federal drug coverage isn’t slated to kick into gear until 2006.
PacifiCare, through its Prescription Solutions mail-order pharmacy company, could benefit from the added drug coverage, which primarily relies on the private sector to deliver drugs to Medicare patients.
For employers, 2005 stands to be the same old story, with a twist. A survey from Mercer Human Resources Consulting shows that OC and other regional employers expect to see cost increases for healthcare plans,albeit at a modest 5.4% clip, compared to 9.2% this year.
“Another single-digit cost increase will be very welcome,” said Jeannie Prioli, a consultant in Mercer’s Newport Beach office. “But to sustain lower trends in 2006 and beyond will require more systemic change than cost shifting.”
Anxiety over spiraling healthcare costs could lead some employers to the “consumer-driven” health plans, which typically combine an account workers can tap to pay for health expenses plus a high-deductible plan for serious illnesses.
PacifiCare and other companies have introduced various forms of consumer-driven plans.
COMPANY to watch: ADVANCED MEDICAL OPTICS
Advanced Medical Optics Inc., one of Orange County’s younger public companies, starts 2005 as a potential candidate for the billion-dollar sales club, thanks to a pair of large deals.
The Santa Ana-based maker of contact lens products and eye surgery devices has the weighty task of integrating two big acquisitions next year.
It’ll be a key test for a company born just two years ago in a spinoff from Allergan Inc.
Last month, Advanced Medical said it would shell out $1.3 billion to buy Visx Inc., a Santa Clara-based maker of laser vision correction devices.
Back in April, Advanced Medical paid $450 million to buy the eye surgery business of Pfizer Inc., which Pfizer had acquired through its buy of Pharmacia Inc.
With the two businesses in the fold, Advanced Medical stands to have yearly sales of $1 billion, up from $600 million last year.
,Vita Reed
PERSON to watch: Timothy Tyson
Tim Tyson, who takes over as chief executive of Costa Mesa’s Valeant Pharmaceuticals International next month, will be just the third boss the four-decade-old drug maker’s ever had.
Tyson next month replaces transitional chief Robert O’Leary, who’s staying on as chairman.
Much of Valeant’s core task,breaking with the reign of founder and former chief executive Milan Panic,is done.
That includes changing the com- pany’s name from ICN Pharmaceuti-cals Inc., selling off far-flung operations and buying back Ribapharm Inc., which Panic spun off part of in 2002.
The charge now is coming up with new products to replace fading cash cow ribavirin, a hepatitis C drug that’s feeling heat from generic rivals.
Tyson plans to focus product development and acquisitions in three areas,infectious diseases, dermatology and specialty neurology.
Look for Tyson to make headway next year on a couple of key products: viramidine, a next-generation version of ribavirin, and remofovir, a drug that’s aimed at treating hepatitis B.
,Vita Reed
