The US Food and Drug Administration (FDA) reinstated the previously suspended approval for Hospira’s (HSP) generic version of Eloxatin (chemotherapy agent), giving the company some relief for the time being. The Eloxatin issue has been in the news for the past few days ever since Hospira received the approval to launch its generic version of the drug, which is manufactured by French giant Sanofi-Aventis (SNY). Along with Hospira, the largest generics player Teva Pharmaceuticals (TEVA) also received the approval to sell its generic version of the drug.
However, soon after granting approval, the FDA ordered both Teva and Hospira to stop shipment of the drug pending patent infringement litigation filed by Sanofi-Aventis against both the companies. Recently the court order was dissolved following which both Teva and Hospira resumed shipment of the drug, known generically as oxaliplatin. Although the companies have resumed shipment, we are concerned about the ongoing legal proceedings. Hospira might have to stop shipping its product if the court rules against the company.
Eloxatin (Sanofi’s fifth biggest medicine), being one of the best selling drugs for colorectal cancer recorded U.S. sales of $1.4 billion last year. So, for obvious reasons, Sanofi is trying hard to defend its patent. The Eloxatin patent has already expired in several European markets. Sanofi is under immense pressure as several of its best-selling drugs face generic competition.
Hospira’s Specialty Injectable Pharmaceuticals (SIP) is the primary growth driver of the company. Sales from this segment continue to drive the company’s top-line growth. The company earns more than 50% of its revenues from this segment and has been launching several new products, including oxaliplatin. We hope the litigation is resolved soon in order to avoid any uncertainty. We have a Neutral recommendation on the stock.

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