You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • Sony forecasts $2 billion loss, cites weak mobile
     TOKYO – Sony expects its annual loss to swell to more than $2 billion after writing down the value of its troubled mobile business as phone sales were battered by brutal competition.
  • Billionaire’s house arrest sends stocks crashing
      MOSCOW – The arrest of a Russian billionaire has sent shares in his holding company into a tailspin.
  • 2 firms to expand, add jobs
    A pair of companies will look to improve their operations with an investment of nearly $3 million combined, according to tax abatement ­requests filed last week with the city.
Advertisement

Chasing dollars in health industry

P&G, others enter field looking to sell to hospitals, well off

– With sales of medical equipment and services expanding at a 36 percent clip, consumer companies better known for detergent and diapers are cashing in.

Newell Rubbermaid Inc. is making a push into telemedicine. Clorox Co. and Kimberly-Clark Corp. are both angling to become go-to suppliers of disinfectants for hospitals. Procter & Gamble Co. operates a concierge medicine service for patients willing to pay as much as $1,800 a year.

Consumer-product companies have poured billions of dollars into innovation and are struggling to find growth in their traditional businesses so it makes sense to “bleed into something that’s scientific or health-and-wellness related” said Ali Dibadj, a Sanford C. Bernstein analyst.

The “medicalization” of P&G, Newell and Clorox will accelerate as they try to move beyond such easy-to-replicate products as detergent, said Dibadj, who’s based in New York.

As the U.S. population ages, spending for “other medical products,” a category that includes some medical equipment and professional services, will reach $127.2 billion, in the next five years, according to projections from the Centers for Medicare and Medicaid Services.

The Patient Protection and Affordable Health Care Act, with its mandates to reduce hospital stays and readmissions, coordinate care and boost efficiency and access, will accelerate demand, too.

When Inova Health Care Services was looking for telemedicine equipment for its chain of hospitals in Virginia recently, it bought it from Newell, a company best known for storage containers, Sharpie pens and Aprica strollers. Newell has built a thriving business selling portable systems that allow doctors to treat patients hundreds of miles away.

Newell Rubbermaid’s move into telemedicine evolved out of a decadelong business of supplying medical record carts to hospitals. With the technology, several doctors in various locations can communicate at once. The telemedicine carts sell for $8,000 to more than $30,000 apiece.

When Mike Polk became chief executive officer in 2011, he identified health care as a priority and late last year appointed a strategist and a team to steer growth in the area.

Telemedicine will be a “much bigger” and faster-growing market than medical records, Dave Pirkle, head of the healthcare division, said in a telephone interview. The company’s medical unit is “rapidly approaching” annual sales of $100 million, the company says.

Clorox has been acquiring companies that make infection-control products. The company’s health-care business is now generating $100 million in sales a year, according to Chief Executive Officer Don Knauss.

In an interview last year, Knauss called health care “the No. 1 priority” for acquisitions and said he expects the sector to become a $300 million business.

Kimberly-Clark has its own hospital disinfection unit and says health-care sales grew to $1.6 billion, or 7.7 percent of total revenues, last year, against $1.2 billion, or 6.3 percent, in 2008.

Kimberly-Clark shares had gained 24 percent in the 12 months through Jan. 29, compared with 15 percent for Clorox.

Compared with its peers, P&G has taken the most radical departure with its move into upscale concierge medicine. MDVIP, as the service is called, charges patients an annual fee of $1,500 to $1,800 for access to primary care doctors with limited caseloads, sophisticated screening tests for such conditions as cardiac disease, and affiliations with leading hospitals, including the Mayo Clinic. Within the next decade, P&G plans to turn MDVIP into a $1 billion brand to rival such franchises as Tide and Gillette.

MDVIP is still small for a company that had $84 billion in sales last year. To put the medical services in perspective, P&G has 26 brands that each pull in $1 billion in sales a year, or more. Pampers alone accounts for $10 billion in annual sales.

P&G bought a stake in MDVIP in 2007 and full ownership in late 2009 for an undisclosed amount, part of its push into services that include Tide Dry Cleaners and Mr. Clean Car Washes.

Advertisement