) shares fell significantly following the import ban imposed by
the US Food and Drug Administration (FDA) on some of the
company's offerings. Hospira withdrew its guidance for 2013
following the FDA decision.
We remind investors that in Nov 2012, the FDA had issued a
directive prohibiting the Hospira from importing Symbiq
medication infusion pumps, manufactured at its Costa Rica
facility, into the US. However, a few days back the FDA dealt a
more damaging blow to Hospira when it expanded the import ban.
Following the fresh directive, Hospira is also prohibited from
importing Plum, GemStar and LifeCare PCA infusion pumps,
manufactured in Costa Rica, into the US. Hospira stated that it
intends to support the repair and service of the affected pumps
to existing customers.
Hospira expects the expansion of the import ban to adversely
impact its 2013 net sales by $50-$100 million. The expectation is
based on the assumption that the ban will stay throughout 2013.
The company also expects the FDA's action to hurt its adjusted
per share earnings guidance of $2.05 to $2.20 (issued while
releasing its fourth quarter and full year 2012 earnings
results ) by 5-15 cents per share. Hospira intends to issue
a new guidance for 2013 while releasing its earnings results for
the first quarter of 2013 later this year.
Apart from the issue related to the infusion pumps, Hospira is
facing many other challenges. The ongoing manufacturing issues at
its Rocky Mountain facility have hurt the company's earnings over
the last few quarters. The issue, until resolved, will remain a
major overhang on the stock. Manufacturing issues at Hospira's
other facilities, such as at Lake Forest, McPherson, Austin and
IKKT are further challenges for this global specialty
pharmaceutical and medication delivery company.
Hospira carries a Zacks Rank #3 (Hold). Favorably placed stocks
in the medical sector include
Edwards Lifesciences Corporation
). All these stocks carry a Zacks Rank #2 (Buy).
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