Quote:
Originally Posted by keg92101
I would actually like to see Cisterra get their hands on it. Something tells me that there is a market for more larger floor plate office in that area, with DVT now at 100%. Of course, this would be a few years off, untill the credit market comes back, but I'm all for another office tower over a condo hotel, even if it does mean that we lose cosmo square.
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Agree. We need more jobs downtown... Why doesn't the Downtown Partnership start courting Cardinal Health... Move those professional jobs downtown... How about Qualcomm, can't they move some jobs downtown too? There is room in the towers... and more can be built...
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Cardinal says it will spin off tech business, base it in S.D.
By Terri Somers
UNION-TRIBUNE STAFF WRITER
September 30, 2008
Bringing a glint of sunshine to an otherwise gloomy day for the economy, Cardinal Health announced yesterday that it will spin off its medical technology business as a separate company based in San Diego.
Cardinal, the country's No. 2 drug-distribution company, said the new publicly traded company may create up to 1,000 additional jobs in the next several years. Most of those jobs, in professional positions such as finance, human resources and information technology, will be based in San Diego, it said.
The move will create a medical-equipment company focused on research and development of new devices, Chief Executive R. Kerry Clark told analysts.
“This is good news and we need some of that right now,” said Alan Gin, an economist at the University of San Diego. “Even in this economic downturn, research and development jobs, especially in the biotech sector, have been a bright spot.”
Cardinal Vice Chairman David Schlotterbeck, 61, will become chief executive of the new public company, which has not yet been named. Schlotterbeck was formerly chief executive of Alaris Medical Systems, a San Diego medical-device company that was acquired by Cardinal for $2 billion in 2004.
Alaris' technology includes infusion pumps, which are small computers that control the flow of intravenous drugs to help prevent mistakes that can lead to overdosing.
The new company will also include the technology of Pyxis, a San Diego medical-technology company that developed computerized prescription drug dispensing systems and was acquired by Cardinal for $920 million in 1996. Ventilators and infection-prevention products will also become part of the new company.
Of Dublin, Ohio-based Cardinal's estimated 50,000 employees worldwide, about 10,000 will work for the newly created company, including 2,000 already in San Diego. The spinoff is expected to be completed by the middle of next year. It will have revenue of more than $4 billion, the company said.
When it comes to income, the products sold by the spinoff are among the fastest growing in the world, Schlotterbeck said.
“We will be the largest pure play medical-technology company that is focused on medical management and infection prevention in the world,” Schlotterbeck said. “I'm just very excited about having the opportunity to do this.”
With the Pyxis acquisition, Cardinal started a phase of expansion in which it targeted promising products that could be sold to its existing customers. But integrating the acquired companies was difficult, said George Barrett, who has headed Cardinal's health care supply line services and will become Cardinal's CEO after the spinoff.
Cardinal has also recently struggled with declining revenue growth in its wholesale drug business due to increased pricing power of large U.S. drugstore chains.
Analysts said the spinoff should help attract a higher stock valuation for the new company.
“The clinical-technology side is really the crown jewel,” said Jeff Jonas, portfolio manager at Gabelli Health and Wellness Trust Mutual Fund. “So that would presumably get a much higher multiple in the market as a stand-alone company.”
He predicted the two entities would have a combined valuation of $60 a share. Cardinal shares closed down $1.16 yesterday at $48.54.
Cardinal did not specify how stock in the new company will be allocated to its shareholders.
Biotechnology continues to weather the financial storm because technologies like those that came out of Alaris and Pyxis help the health care system save money, said Joseph Panetta, who heads Biocom, the industry trade group in Southern California. Interest in these technologies will continue to grow as budgets tighten, Panetta said.
San Diego's biotechnology cluster is well positioned to benefit from this growth, as evidenced by Cardinal's announcement and the news last week that pharmaceutical powerhouse Eli Lilly would open an office here to house SGX Pharmaceuticals and AME, two local companies that it acquired, Panetta said.
It helps that San Diego has a thriving cluster of biotechnology companies and research institutes, because it provides a pool of trained employees, Gin said.
Some of the logistics that make San Diego difficult for other industries, such as manufacturing, don't affect biotech so dramatically, he said. The products of research and development don't have to be shipped by sea or land, for instance; they can be transported over the Internet, he said.