Between recent regulatory problems (here, here and here) and lagging the market with pump connectivity, Baxter's inked a deal with SIGMA (press release). In the deal, Baxter pays SIGMA $100 million for exclusive distribution rights world wide and a 40% equity stake in SIGMA and the option to acquire the rest of the company in the future. "Baxter may make additional payments of up to $130 million for the exercise of its option to purchase the remaining portion of the company as well as for the achievement of certain R&D, regulatory, and commercial milestones, according to the release."

It's interesting to note the 3 categories of milestones. Given that SIGMA is way ahead of Baxter from a connectivity perspective, the fact that SIGMA has R&D milestones (that one assumes are required to remain competitive) indicates the increasing importance of workflow automation in purchase decisions, and the difficulty of developing that same set of features. It's not clear how Baxter's regulatory issues, which should be mostly behind them, play into the deal -- but a separate product development process and good manufacturing practices would appear to provide a regulatory buffer from any lingering issues Baxter faces. I'm assuming commercial milestones are sales commitments on Baxter's part, and perhaps manufacturing capacity commitments for SIGMA.

Greg Stett, a clinical analyst at MD Buyline asked the hard question:

When we asked Baxter about what their plan will be down the road if they were to completely acquire SIGMA, more specifically if the two product lines would be integrated in any way, they officially said, “Baxter will continue to develop our next generation products, remediate the COLLEAGUE volumetric infusion pump, and establish an agreement with the FDA on a path forward for re-commercializing within the U.S. Baxter remains committed to the COLLEAGUE volumetric infusion pump platform, and development of the next release of the COLLEAGUE volumetric infusion pump will continue as planned.” So, at this time, past COLLEAGUE issues will not slow down future development of the new generation COLLEAGUE products.

A number of questions come to mind:

1. How much of a factor was Baxter's recent regulatory problems? 
2. How many connectivity R&D problems has Baxter been running into? It's been 4 or 5 years since they showed wireless term server connectivity along with an application on a PDA at HIMSS.
3. After popping $150 million for the SIGMA pump, why develop a new Colleague? Given Baxter's business model is based more on disposables and consumables rather than capital equipment, why not just buy SIGMA?
4. How much of a factor was startup Fluidnet, who just submitted their 510(k) in June, 2009?