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RPT-Pfizer's Hospira deal bets on price spike for specialty generics
2015年2月6日 / 中午12点06分 / 3 年前

RPT-Pfizer's Hospira deal bets on price spike for specialty generics

(Repeats story that originally ran on Thursday)

By Bill Berkrot and Ransdell Pierson

NEW YORK, Feb 5 (Reuters) - Pfizer Inc’s $15 billion deal to buy Hospira Inc will allow the largest U.S. drugmaker to benefit from specialty generic medicines that are commanding far higher prices than traditional off-patent pills, industry investors and analysts said.

High demand for many of its injectable sterile drugs, including outright shortages in some cases, has allowed Hospira to increase prices in recent years.

Pfizer said on Thursday it will be adding the business to its unit of “global established products” - now primarily a collection of conventional pills that have gone off-patent and steadily lost value due to competition from cheap generics.

The combination will make the established products unit a more attractive play for investors should Pfizer eventually spin it off or sell it, a decision expected in 2017.

“A lot of established products are diminishing assets, whereas the generics business is growing nicely for specialty injectables. The portfolio tends to be more durable,” said Kevin Kendra, an analyst with Gabelli & Co, which holds Hospira shares.

Pfizer said the $37 billion global market for sterile injectables in 2013 will double to $70 billion by 2020. Such products include cancer drugs delivered by infusion pump, intravenous medicines, pre-filled syringes, bags and vials used by hospitals.

They are harder, and more expensive, to manufacture with the proper quality controls than traditional pills, and the number of companies that specialize in their production has dropped dramatically in recent years due to a wave of consolidation among generics companies.

Hospira had a series of quality control problems beginning in 2010 at its plant in North Carolina and later facilities in India and elsewhere, since fixed, as well as several product recalls, contributing to shortages.

“It hurt Hospira when they couldn’t supply, but now that they’ve gotten their plants fixed up, they’re benefiting from competitors’ own manufacturing issues,” Kendra said.

For the first nine months of 2014, Hospira sales grew more than 14 percent to $3.34 billion. Pfizer’s established products unit saw sales decline 9 percent in 2014 to $25.1 billion.

Pfizer can now vastly expand sales of the products it is acquiring due to its global presence. Some analysts say that will help justify the 39 percent premium it agreed to pay for Hospira, which makes about 80 percent of its sales in the United States.

“The combined company will leverage Pfizer’s global commercial network to expand Hospira’s portfolio into Europe and the emerging markets,” JP Morgan analyst Chris Schott said.

Pfizer’s manufacturing expertise could also boost confidence in quality controls.

“Pfizer is one of the best sterile products manufacturers in the industry, which should be comforting” to U.S. health regulators, Suntrust Robinson Humphrey analyst John Boris said.

In fact, industry experts believe the Hospira deal bolsters the case for separating the Pfizer established products business soon.

“It would make that established products business that much more attractive on a global basis with this addition of Hospira’s revenue base,” said Len Yaffe, portfolio manager of the StockDoc Partners healthcare fund that holds both Pfizer and Hospira shares. (Editing by Michele Gershberg, Bernard Orr)

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