Category Update
New Brands, New Owners, New Deals For Medical Device Industry
Category’s new deals illustrate positive influence of merger activity on sponsorship; properties should prospect among companies acquiring or being spun off.
8/10/09: Changes in corporate ownership are fueling new sponsorship spending from manufacturers of medical devices and products. The category, which became active in sponsorship just a few years ago, has witnessed a flurry of new deals recently.
The influx of dollars serves as a reminder to properties searching for sponsorship prospects that mergers, acquisitions and spin-offs frequently prompt new spending as companies seek to establish their new identities with consumers, business partners, employees and other audiences.
The medical device category is comprised of products used by medical professionals and consumers. While most of the recent deals are predicated on generating familiarity with new corporate entities, players in the category traditionally look to build awareness of specific products and to educate patients about treatment options.
CareFusion Sponsors Jazz Fests To Reach Hospital Decision-makers
CareFusion Corp.–a maker of a wide range of products used in hospitals, from medication dispensing systems to ventilators to surgical instruments–is estimated to be spending in the high-six-to-low-seven figures for title or high-level sponsorships of six jazz festivals.
Sponsorships promoted under the CareFusion Jazz Festival Series banner include title to the granddaddy of jazz fests, the just-concluded George Wein’s CareFusion Newport Jazz Festival 55, as well as presenting sponsorship of Labor Day weekend’s Chicago Jazz Festival.
In addition, CareFusion will title October’s Manly Jazz Festival near Sydney, Australia and Jazz Festival Paris, as well as next year’s New York Jazz Festival. It also will present Dizzy’s Den at next month’s Monterey Jazz Festival presented by Verizon.
CareFusion–a company name unveiled just a month ago–established the series to support its planned September 1 spin-off from Cardinal Health, Inc., a major pharmaceutical and medical supplies and equipment distributor.
Currently a wholly owned subsidiary, CareFusion will become a public company traded on the New York Stock Exchange.
“We saw this as a unique, efficient way to launch a new brand and company,” said Jim Mazzola, senior vice president of corporate marketing and communication. “The faster we launch our brand and generate awareness, the more established we will become.”
The company was drawn to jazz due to the genre’s popularity among hospital CEOs, chief medical officers and other decision-makers, Mazzola said, as well as the connection between the company’s products and the “healing power of music.”
CareFusion also saw festival sponsorship as a relatively inexpensive way to build buzz on an international level. “We’re trying to launch the brand in a fairly lean way,” Mazzola said.
CareFusion will leverage the series with the Rhythm of Care program, an effort to promote and address patient safety issues such as infection prevention and the elimination of medication errors.
The company will invite medical practitioners and hospital administrators to learn more about the Rhythm of Care Safety Coalition at VIP events at each festival, and will raise money for related charities.
The company will further leverage the program by broadcasting performances from each festival through hospital TV networks and by offering all hospital staff the opportunity to watch the Virtual Stage broadcasts on their computers or TVs.
“It’s one more way to help our customers and bring CareFusion directly into their environment,” said Mazzola.
The company also plans to broadcast amateur jazz performances from hospitals to screens set up as second stages at the festivals.
The company does not plan to use the sponsorship to generate awareness among investors, Mazzola said.
Sponsorship agency The Exordium Group helped CareFusion develop the sponsorship strategy.
Covidien Taps Sports Deals To Generate Awareness
Similar to CareFusion, Covidien plc signed sponsorships with the MLB Boston Red Sox, NFL New England Patriots and NHL Boston Bruins to build its new brand after Tyco Int’l spun off Tyco Healthcare into publically traded Covidien in ’07.
“We had a new name, and no one knew who Covidien was,” said Eric Kraus, the company’s senior vice president of corporate communications and public affairs, who spearheaded the sports marketing initiative.
“We wanted to create some word-of-mouth excitement.”
The Dublin, Ireland-based company has its U.S. headquarters in Mansfield, Mass. Looking to demonstrate its corporate citizenship, the diversified medical products manufacturer aligned with the Red Sox’ and Patriots’ charitable foundations.
“That was a very important aspect of the relationship. It gave us instant credibility,” said Kraus, who had extensive experience with sports sponsorship in his previous role as vice president of corporate communications and public affairs for The Gillette Co.
The partnerships also provide extensive exposure for the Covidien name.
For example, the Red Sox partnership includes signage on Fenway Park’s Green Monster, while the Patriots and Bruins deals afford branding on backdrop signage during TV interviews.
Covidien also has used the program to reach potential employees, said Kraus, noting that the company has hired roughly 400 employees since going public.
The company does not use the sponsorships to reach the investment community, nor does it use them to entertain doctors, purchasing managers and other hospital and medical practice staff who purchase medical products.
Covidien, like other medical technology companies, is under strict guidelines related to hospitality from AdvaMed–the Advanced Medical Technology Assn., Kraus said.
Other new activity in the category includes Philips Respironics, Inc.’s title of the half marathon at the Dick’s Sporting Goods Pittsburgh Marathon. Royal Philips Electronics N.V. acquired Murrysville, Pa.-based Respironics, Inc. in March ’08.
The home healthcare subsidiary of the Dutch conglomerate partnered with the marathon to raise awareness about the importance of sleep to health and fitness. The company specializes in sleep disorder and respiratory equipment.
The company also has made a foray into branded entertainment through a tie-in with NBC’s The Biggest Loser: Couples, around which it provided diagnosis and treatment for contestants suffering from obstructive sleep apnea.
Meanwhile, defibrillator manufacturer Medtronic, Inc. a category pioneer in terms of sponsorship, is in year four of a five-year deal to title the Twin Cities Marathon.
Sources
CareFusion Corp., Tel: 888/876-4287
Covidien plc, Tel: 508/261-8000