Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hospira’s Q4CY11 numbers were below Street estimates, marred by
manufacturing issues at Rocky Mountain, Texas and Kansas facility. It
expects the remediation process to be completed by CY12 with optimal
supplies over CY14. This is likely to benefit Indian players such as Sun,
Strides and Cadila. Moreover, the company’s CY12 guidance indicates lack
of product opportunities in the US. Its pipeline includes 73 molecules with
small market value. This further reinforces our concern over growth beyond
CY12. However, management was upbeat on biosimilar opportunity and is
ahead of the game with a pipeline targeting USD40bn market.
Manufacturing issues mar performance
While revenue grew 2% YoY, EBIT margin declined QoQ to 11% from 15%. Adjusted EPS
of USD0.51 declined 34% YoY and 23% QoQ. Hospira has guided continued remediation
efforts at the Rocky Mountain facility and constructive dialogue with FDA. It expects
supplies to improve over H2CY12 (from current 60‐70% capacity utilization). However,
remediation efforts could continue post CY12 and optimal supply will resume CY14
onwards.
CY12 guidance: Flat growth and margin contraction likely
Hospira has projected USD300mn‐375mn remediation costs over 2‐3 year period, of
which it has incurred USD111mn in H2CY11. Management has guided flat revenue growth
next year led by reduced supplies and small product launches. It expects relaunch of
generic Eloxatin by August and indicates continued pricing pressure on Docetaxcel and
Gemcitabine.
Read across for Cadila: Expect lower revenue from Docetaxel
Hospira has indicated that it expects income from JVs to decline by half due to lower
revenue and related margin from Docetaxel, which could have ‘negative impact on Cadila
profitability’ in FY13. Cadila’s revenue from JV is ~USD16‐17mn with margins of 40‐50%.
Windfall likely for Indian generic players from supply issues
Hospira manufacturing issues have been a boon to Indian manufacturers such as Sun and
Strides, with increasing rate of approval and price increases in products facing shortage.
Given the timelines projected, the supply‐demand gap could be exploited over next two
years. We expect Sun and Strides to be primary beneficiaries. Further, FDA could fast
track facility approvals and resolution of issues at Cadila, Claris and Aurobindo.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hospira’s Q4CY11 numbers were below Street estimates, marred by
manufacturing issues at Rocky Mountain, Texas and Kansas facility. It
expects the remediation process to be completed by CY12 with optimal
supplies over CY14. This is likely to benefit Indian players such as Sun,
Strides and Cadila. Moreover, the company’s CY12 guidance indicates lack
of product opportunities in the US. Its pipeline includes 73 molecules with
small market value. This further reinforces our concern over growth beyond
CY12. However, management was upbeat on biosimilar opportunity and is
ahead of the game with a pipeline targeting USD40bn market.
Manufacturing issues mar performance
While revenue grew 2% YoY, EBIT margin declined QoQ to 11% from 15%. Adjusted EPS
of USD0.51 declined 34% YoY and 23% QoQ. Hospira has guided continued remediation
efforts at the Rocky Mountain facility and constructive dialogue with FDA. It expects
supplies to improve over H2CY12 (from current 60‐70% capacity utilization). However,
remediation efforts could continue post CY12 and optimal supply will resume CY14
onwards.
CY12 guidance: Flat growth and margin contraction likely
Hospira has projected USD300mn‐375mn remediation costs over 2‐3 year period, of
which it has incurred USD111mn in H2CY11. Management has guided flat revenue growth
next year led by reduced supplies and small product launches. It expects relaunch of
generic Eloxatin by August and indicates continued pricing pressure on Docetaxcel and
Gemcitabine.
Read across for Cadila: Expect lower revenue from Docetaxel
Hospira has indicated that it expects income from JVs to decline by half due to lower
revenue and related margin from Docetaxel, which could have ‘negative impact on Cadila
profitability’ in FY13. Cadila’s revenue from JV is ~USD16‐17mn with margins of 40‐50%.
Windfall likely for Indian generic players from supply issues
Hospira manufacturing issues have been a boon to Indian manufacturers such as Sun and
Strides, with increasing rate of approval and price increases in products facing shortage.
Given the timelines projected, the supply‐demand gap could be exploited over next two
years. We expect Sun and Strides to be primary beneficiaries. Further, FDA could fast
track facility approvals and resolution of issues at Cadila, Claris and Aurobindo.
No comments:
Post a Comment