Hospira Inc.
(HSP) recently announced that the US Food and Drug Administration (FDA) approved its oxaliplatin injection for colon cancer. The medication is a version of Sanofi-Aventis’ (SNY) generic drug, Eloxatin. The injection, available in solution form, is used to treat advanced colon cancer and stage III colon cancer after surgery. Hospira presently sells the drug in 50 mg and 100 mg single-use vials.

The new product is a shot in the arm for the specialty generic injectable pharmaceuticals maker as it will significantly boost the company’s top-line. The generic version sold by Sanofi-Aventis generated US sales of $1.4 billion in 2008, representing the drug’s huge potential.

Colon cancer is becoming common these days, particularly in the Western World, where it is the third most common form of cancer and the second leading cause of cancer-related death.

Hospira’s products include roughly 200 generic injectable drugs in many dosages and formulations. The company has a strong product pipeline, with approximately 25 generic drugs scheduled for global launch in 2009 and 2010. It faces tough competition in the injectables market from Baxter International (BAX) and Becton, Dickinson and Co. (BDX), which have larger resources.

Hospira’s balance sheet is not in a good shape. At the end of the second quarter, it had a huge debt of roughly $1,706 million and a cash balance of about $609 million.

Its massive debt load requires Hospira to dedicate a substantial portion of its cash flow from operations to servicing its creit obligations, thereby reducing the availability of cash to fund development of new drugs, capital expenditures, pursue other acquisitions and investments in new technologies.

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