Delphi Medical sparks sales

Devices improve supplier's vital signs

Sharon Terlep / The Detroit News

The same health care system that's eating the auto industry's profits also could deliver some badly needed wins for bankrupt Delphi Corp.

A fledgling medical systems unit that spun off four years ago from the Troy-based auto parts giant is making a grab for a larger share of the fast-growing and highly profitable medical device industry.

Delphi is working on a slew of new gadgets, from a tiny pump that would help administer IV drugs at home to a mobile device that will allow patients to report their vital signs to caretakers through the Internet.

Success in the field would give the company a foothold in an industry that leads the world in the pace of production, turning out nearly $78 billion annually in products. While U.S. automakers watch their market share erode, U.S.-based medical supply companies are growing at a rate of nearly 6 percent a year.

"We're small and nimble and if something isn't working well, we can switch it up quickly," said Jeff Jorge, global business development manager for the VitalPoint Home monitoring system, one of Delphi's new products. "At the same time, we have access to technology that no one else does."

Delphi Medical Systems, with fewer than 400 employees, has the advantage of being small and flexible, analysts say. At the same time, the business has the backing of all of Delphi, with its nearly 17,000 patents and 16,000 engineers.

The supplier's medical unit is growing fast. Delphi Medical is in a five-year contract with Ohio-based medical device heavyweight Cardinal Health Inc. to create new respiratory care devices. A year ago, Delphi spent $44 million on a Colorado-based manufacturer of medical devices. And, in 2004, Delphi inked an $80 million deal with Sunrise Medical, one of the world's largest makers of home and extended-care products.

Some of the same technology Delphi has created for cars and trucks can be used in health equipment. The IVantage infusion pump, a more portable form of the pumps used to administer fluids to patients in hospitals, shares the same system of electrical wiring Delphi has created for cars. The lead engineer on the pump project is a 20-year veteran of Delphi's automotive side.

One of the newest Delphi products on the market, the VitalPoint Home system, reads a patient's blood pressure, glucose level, pulse and respiratory rate, temperature and weight using data collection methods used to track the vital statistics of vehicles. The system beams those vital signs to a Delphi Medical Web site via a regular phone line, allowing caregivers to check up on patients miles away. The VitalPoint launched last fall.

The market is hot for such items, especially those that advance patients' ability to get medical care from home. But the field is also highly competitive, with well-established names like Johnson & Johnson and Boston Scientific regularly churning out new products.

Delphi's medical unit is still relatively small. Delphi's nonautomotive business, which also includes consumer electronics, generates about $2.4 billion in annual sales -- less than 10 percent of Delphi's overall sales.

Competition is fierce. But so is the potential to grow.

"We don't see the market getting saturated, since people are continually trying to come up with a better mousetrap," said Ted Ginsburg, a consultant with Cleveland-based Top Five Data Services Inc. "I don't see anything that would cause the growth to stop."

Delphi is banking on that to continue. The company filed for bankruptcy in October, citing a need to reorganize and reduce labor costs inherited in its 1999 spin-off from General Motors Corp.

Production cuts at GM, rising material costs and global pricing pressures have undermined Delphi's profits in recent years.

Delphi's medical side appeared promising enough to lure John Harris, along with his wife and three children, to Michigan from Utah, where he worked in a medical device company.

The field is attractive for workers, as well. Medical technology workers earn nearly 50 percent more than average private sector employees and 18 percent more than general manufacturing workers, according to Washington, D.C.-based AdvaMed.

"I looked at the automotive technology and the power behind Delphi," said Harris, who is the business development manager for dialysis and infusion. "I thought it was too good to pass up."

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.