BIOTECHNOLOGY : McGaw Announces Recent Contracts Worth $165 Million

McGaw Inc. has been on a roll since the Irvine manufacturer of intravenous-therapy solutions and equipment was acquired last October for $200 million by an investor group led by James M. Sweeney.

Sweeney, chairman and chief executive, reported Thursday that the company had landed a $20-million, five-year contract to supply its products to 18 acute-care hospitals owned and operated by the Franciscan Health System of Aston, Pa.

Within the last 60 days, McGaw also has obtained two $50-million contracts with other hospital chains. And in December, the company entered a four-year agreement to distribute $45 million in home-care products made by Block Medical Inc. of Carlsbad.

“With these new contracts, we are looking for our revenues to increase 20% in the current year,” Sweeney said. “We are converting hospitals from competitors to McGaw, and that hasn’t happened in 10 years.” In 1990, he said, McGaw had relatively flat revenue of $230 million.

Sweeney credited the new business expansion at McGaw in part to the company’s development of a bag used to administer IV solutions.

He said McGaw had been losing market share since Baxter Healthcare Corp. in 1972 became the first company in the industry to offer hospitals plastic IV bags as an alternative to glass bottles. In response, in 1978, McGaw “came out with a semi-rigid container that was a flop in the marketplace” because it was difficult to use, he said.

Now, McGaw finally has a plastic IV bag of its own to sell. Moreover, Sweeney said, McGaw is the only major U.S. manufacturer of IV equipment that makes a bag that does not contain polyvinyl chloride. That is a major selling point, he said, because bags containing polyvinyl chloride cannot be disposed of easily. When incinerated, they pollute the air.