Allegiance Healthcare Corp., the new spinoff of Baxter International, signed a historic alliance with rival General Medical Corp. in a radical departure from past Baxter practices.
The five-year agreement, valued at $100 million, allows General Medical to distribute Allegiance products to hospital and nonhospital customers.
It was announced shortly before the Sept. 30 spinoff of Allegiance from Baxter that split the tattered distribution business from rosier technology products. Allegiance, a $4.5 billion company based in McGaw Park, Ill., includes distribution and some manufactured products. Baxter keeps its interests in biotechnology, cardiac care and other technology areas, accounting for about $5 billion in 1995 sales.
Baxter had been the nation's largest medical-surgical supply distributor, closely followed by Owens & Minor and, at a greater distance, General Medical, Richmond, Va. Baxter was the main distributor of its products.
Allegiance's deal with General Medical could signal a more open attitude. The company stands to gain sales from General Medical's strength in the alternate-site market, an area Baxter never fully developed. As healthcare integrates, an ability to serve physician offices and other alternate sites could be critical to hospital distributors.
General Medical, in turn, might find it easier to win hospital contracts. Thus, its collaboration with Allegiance could heat up competition between the companies.