) primarily provided an insight regarding its way forward at its
Investor Day on Dec 5, 2013 apart from providing an update on its
current operations. Hospira stated that it is the market leader
in the generic injectables market commanding a 34% share in the
$9 billion market.
The company further stated that it is highly optimistic about its
Specialty Injectable Pharmaceuticals (SIP) segment, the biggest
contributor to the company's top line. The SIP pipeline had 77
molecules, as of Sep 30, 2013, having significant commercial
Management also said that Hospira is one of the leading players
in the global Medication Management Systems (MMS) commanding a
share of 25% in the $2 billion market. We remind investors that
in May 2013, Hospira announced a global strategy regarding its
devices portfolio. Through this strategy, Hospira aims to
modernize and streamline its device portfolio in order to drive
growth and serve customers in a better manner.
Under the program, the company intends to remove its relatively
old pump technology from the market and bring in customer
replacement programs over the next few years. Moreover, Hospira
intends to focus on developing next-generation pump technology.
The company will focus on strengthening its global device quality
system to facilitate growth.
We believe that this strategy will enable Hospira to sustain
long-term growth. Due to the increased investments aimed
primarily at expansion and modernization, capital spending at
Hospira in the 2014-2018 time period is expected in the range of
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Hospira also threw light on its efforts to grow in the lucrative
biosimilars market. Hospira boasts of a strong biosimilars
pipeline. Biosimilars, which are generic versions of biologic
drugs, are expected to be a significant growth driver in the
generics industry going forward. Hospira stated that currently
the global biologics market is worth approximately $127 billion
and more than $67 billion of it is expected to face competition
from biosimilars by 2020. Hospira also stated that the value of a
biologic going off patent in the U.S. or EU will rise with time.
In Sep 2013, the European Commission approved Inflectra, the
biosimilar version of
Johnson & Johnson
Merck & Co. Inc.
) blockbuster drug Remicade. This is the third biosimilar
marketed by Hospira in the EU. The biosimilar market in the U.S.
is expected in the range of $6-$13 billion by 2020 resulting in
massive cost savings.
Hospira stated that the compounded annual growth rate (CAGR) for
its net sales over the 2013-2018 time period is expected in the
mid to high single digit range. Biosimilars and generics are
expected to account for more than half of the top-line growth at
Hospira over the time period.
Geographically, the CAGR for net sales over the same time period
are mid to high single digits for Americas, low teens for the
Europe, Middle East and Africa (EMEA) region and high single
digits for the Asia-Pacific region. The CAGR for adjusted
earnings per share at Hospira over 2013-2018 is projected in the
mid to high teens range. Hospira said that tax rates will rise
with time driven by changes in the geographical earnings mix.
Hospira expects 2014 adjusted earnings in the range of
$2.10-$2.25 per share. The Zacks Consensus Estimate for 2014
stands at $2.11 per share, towards the lower end of the
management's projected range.
Hospira carries a Zacks Rank #3 (Hold).
) is a better ranked stock in the sector. Advaxis carries a Zacks
Rank #2 (Buy).