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Shares of Hospira Inc. (HSP - Analyst Report) were positively impacted by the European Commission’s decision to approve the company’s Inflectra (infliximab) for the treatment of inflammatory conditions such as rheumatoid arthritis, ankylosing spondylitis, Crohn's disease, ulcerative colitis, psoriatic arthritis and psoriasis.

We note that Inflectra is the biosimilar version of Johnson & Johnson / Merck & Co. Inc.’s (JNJ - Analyst Report)/(MRK - Analyst Report) blockbuster drug Remicade. Hospira stated in its press release that Inflectra is the first monoclonal antibody therapy to be cleared in Europe through the European Medicines Agency (EMA) biosimilars regulatory process. Hospira stated further that Remicade sales had crossed the $2 billion mark in 2012.

The decision of the EC does not surprise us since in Jun 2013 the EMA’s Committee for Medicinal Products for Human Use (CHMP) had recommended the approval of Inflectra for the treatment of inflammatory diseases.

Positive results on Inflectra from a phase III study prompted the EC to clear the drug. Inflectra met its primary endpoint of therapeutic equivalence to Remicade in the study. Data also revealed that the safety and tolerability of Inflectra was comparable to Remicade. Hospira currently enjoys the rights to Inflectra in Europe, some nations belonging to the Commonwealth of Independent States, the U.S., Canada, Australia and New Zealand under the agreement it signed with South Korean company, Celltrion, in 2009.

Hospira also said in its press release that the ushering in of monoclonal antibodies is expected to generate savings of up to €20.4 billion in Europe by 2020. Countries like the UK, France and Germany are expected to be the biggest beneficiaries from the move.

We note that 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 in the coming years. The biosimilars market represents huge commercial opportunity with a significant amount of biologic sales slated to lose patent protection in the coming years.

Hospira carries a Zacks Rank #3 (Hold). Alere Inc. (ALR - Snapshot Report) appears to be well placed in the medical sector with a Zacks Rank #1 (Strong Buy).

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