Medical Device Daily Contributing Writer

PARIS — The compromise agreement for reforming Germany's 1140 billion ($182 billion)-a-year healthcare system hammered out by Chancellor Angela Merkel (Medical Device Daily, Feb. 6, 2007) has been approved by both houses of parliament and with the signature of German President Horst K hler will take effect April 1.

The approval marks a victory for Merkel, who held together an unwieldy right-left coalition to win a majority of Germany's 16 states in the Bundesrat, the upper house of Parliament, late last week after widespread defections threatened passage of the compromise in voting in the lower house, or Bundestag. Merkel finished with a firm majority.

The reform seeks to cut costs in Germany's generous statutory health plan by introducing greater transparency in financing and market-driven pricing. But the reform will create an annual shortfall estimated at 17 billion ($9.1 billion) that the government agreed to underwrite through taxes.

Widely criticized as a watered-down measure, the main tenets of Merkel's reform that will pass into law in April remain controversial.

The bill creates universal coverage for Germans, extending health benefits to the estimated 300,000 citizens who currently fall outside the system.

More hotly contested is the creation of a central federal fund to consolidate statutory contributions paid to more than 250 separate funds managed by insurers. While the independent funds remain in place, the new law shifts the incentive for efficiency to these funds by allocating a fixed annual payment per subscriber.

To assure competitive pricing, the new law requires that a fund experiencing an operating shortfall either absorb its losses or raise its premiums at the risk of losing subscribers to competing funds.

The central fund will not come into effect until 2009 under the compromise worked out in January. More than 70 million Germans, roughly 90% of the population, contribute about 14% of annual salary to a health fund.

In a joint statement issued after the vote, six of Germany's large insurance funds said the financial problems of the healthcare system would not be solved by the reform, and that insured persons would have to pay more since the bureaucracy was inflated.

"It is only a matter of time until the next reform begins," they said in the statement.

New venture brings wound-care products to U.S.

Hollister Wound Care, a joint venture created by Laboratories Urgo (Dijon, France) and Hollister Inc. (Libertyville, Illinois), will offer to North American clinics the Urgotul line of wound dressings and targets a 5% share of the market, estimated to be $400 million annually, according to Fran ois Robert, Urgo's head of international sales.

In an interview with the Dijon newspaper Le Bien Public-Les D p ches, Robert said four companies approached Urgo after the company failed to crack the U.S. market on its own. "The United States is different world," he said, adding that Hollister represents a "remarkable vehicle" for establishing the brand.

Robert said Urgo is targeting Japan with a similar partnership.

Urgotul dressings feature a lipido-colloid contact layer to promote wound healing, with a consistently moist environment and tissue protection for burns, traumatic wounds, post-operative wounds and skin abrasions.

In a company statement, Urgo claims a 41% share of the French wound-care market, says it leads in Germany and overall is Europe's fourth-largest provider of such products.

Urgo is part of the Fournier Pharma group purchased in 2005 by the Belgium-based Solvay that last week reported 2006 sales of 19.4 billion ($12.2 billion). Solvay's pharmaceutical activities accounted for 12.6 billion ($3.4 billion) of sales in 2006, an increase of 15% over 2005.

The sales goal for the joint venture translates to 4 million dressings for Hollister, which is responsible for North American sales and distribution. Laboratories Urgo will be responsible for product development and production at a 37 million euro ($48 million) facility opened at the end of 2005 in Chevigny-Saint-Sauveur, a suburb of Dijon.

Sartorius acquires control of Stedim

Sartorius (Goettingen, Germany), a laboratory and process equipment provider, has acquired control of Stedim (Aubagne, France), a manufacturer of disposable bag and freeze-thaw technology systems for biopharmaceutical applications.

Under the terms of the agreement, the two founders of Stedim, who hold 51% of the company, will sell a controlling interest to Sartorius at 143 per share. Sartorius will make a public tender offer to acquire all outstanding Stedim shares at the same price. The transaction is subject to approval by Stedim's shareholders and is expected to be completed this summer.

Sartorius said it will carve out its biotechnology division into a new legal entity to be called Sartorius Stedim Biotech that will be listed on Euronext Paris and is valued at 1550 million ($715 million), with pro forma sales for 2007 of more than 1400 million ($520 million) and a 14% EBITDA margin.

Dr. Joachim Kreuzburg, CEO and chairman of the executive board of Sartorius, said in a statement, "Given the strong growth rates in the biopharmaceutical markets and the shift in our markets toward disposable solutions, this transaction significantly accelerates our strategy toward next-generation biopharmaceutical manufacturing."

Sartorius reported revenues of 1521 million ($677 million) in 2006, with 48% coming from sales of mechatronics (high-precision weighing technology) and 52% of sales in biotechnology filtration and fermentation products

Stedim had 2006 sales of 191.4 million ($119 million), 44% of which were generated in North America. In addition to disposable bag systems, the company offers door systems for aseptic transfer technology and a proprietary freeze-thaw technology.