Pediatric Exclusivity for Hospira's Drug

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Hospira, Inc. (HSP) recently gained pediatric exclusivity from the US Food and Drug Administration (:FDA) for its injectable sedation drug, Precedex (dexmedetomidine HCl). The FDA’s decision resulted in a six-month extension of the period, during which Precedex’s generic may not be cleared following its patent expiry.

Hospira stated in its press release that the FDA’s decision to grant pediatric exclusivity to Precedex does not imply that the sedative is approved to treat pediatrics. Precedex continues to be approved for treating adults. Hospira’s pediatric studies on the drug are currently under FDA review.

Hospira received further good news from the FDA regarding Precedex when the US regulatory body cleared a premix version of the drug. The approval of the premix version will provide doctors with a ready-to-use drug that boasts multiple benefits for patient care.

Although impressed by the FDA’s decisions on Precedex, we note that Hospira on the whole is passing through a rough patch due to the ongoing manufacturing challenges at its Rocky Mountain facility as well as issues with the Symbiq/Plum pumps. 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 the company’s other facilities, such as at Lake Forest, McPherson, Austin and IKKT are further challenges for Hospira.

Hospira carries a Zacks Rank #5 (Strong Sell). Not all stocks in the medical sector are performing as poorly as Hospira. Stocks such as CareFusion Corporation (CFN), Abaxis, Inc. (ABAX) and Edwards Lifesciences Corporation (EW) are well placed in the sector and carry a Zacks Rank #2 (Buy).

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