The US Food and Drug Administration (FDA) delivered a boost to Hospira, Inc. (HSP) by approving cancer drug docetaxel. The drug is the generic version of Sanofi-Aventis‘ (SNY) Taxotere, which posted sales of approximately $1.2 billion in 2010.
Docetaxel is expected to hit the US markets later in the month. We note that Taxotere is approved to treat various forms of cancer.
Docetaxel is a single vial solution product as opposed to the two-step process (before infusion) required for the branded version. The generic will be available in the US markets in doses of 20 mg, 80 mg and 160 mg. Docetaxel is already available in 15 countries including all major European markets.
We believe that the US approval of the generic version of Sanofi’s Taxotere, which lost market exclusivity in November 2010, will further strengthen Hospira’s specialty injectable pharmaceuticals (SIP) division, which includes approximately 200 generic injectable drugs.
Another important launch for Hospira will be a solution presentation of gemcitabine, the generic version of Eli Lilly & Co.’s (LLY) Gemzar, in the fourth quarter of 2011. The target date for the candidate was originally in January 2011. However, the FDA issued a complete response letter (CRL) seeking more information. Hospira is working to provide a response to the CRL. If approved, it would come as another pat in the back for the company’s SIP segment and in turn boost the overall top line.
Our Recommendation
Currently, Hospira carries a Zacks #4 Rank (‘Sell’ rating) in the short run, reflecting near-term pressure. We believe this is primarily due to the disappointing results in the fourth quarter of 2010 and the weak forecast for 2011.
However, we are encouraged by the company’s acquisition of Javelin Pharmaceuticals last year and the expanded supply agreement with Genzyme (GENZ). Hospira’s deal with Durect Corp. (DRRX) is another positive for the company.
We prefer to remain on the sidelines until the Symbiq Pump issues, which have been affecting Hospira’s earnings over the past few quarters, are resolved. Consequently, we are ‘Neutral’ on Hospira over the long term.
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