Hospira Inks Deal

Hospira, Inc. ( HSP - Analyst Report ) recently inked a deal with medical devices company Q Core Medical, Ltd. pertaining to the latter's Q Core Sapphire multi-therapy infusion system. The system is a compact and lightweight infusion device mechanism, which finds frequent usage in ambulatory and hospital settings.

The system boasts of a full-color touch-screen and software for intuitive programming and operation involving minimal steps. The product is already available in Canada and Europe. It is under regulatory review for registrations in many other nations, including the US.

The deal provides Hospira with exclusive rights to market and distribute the system in more than 60 important markets encompassing Europe, Asia and the Americas. Following the deal, Hospira can collaborate with the medical devices company for distribution of its pipeline candidates. The addition of the device to its product portfolio further strengthens Hospira’s already formidable medication management systems (MMS) segment. Symbiq general infusion pumps already belong to the MMS segment.

We note that Hospira is going 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.

Moreover, the warning letter received by the company from the US Food and Drug Administration (FDA) in Aug 2012 regarding an inspection of the company’s La Aurora de Heredia, Costa Rica device manufacturing facility, is another matter of concern. The facility at Costa Rica makes most of Hospira’s infusion devices and sets (Symbiq, Plum etc.).

Moreover, the FDA’s directive, issued in Nov 2012, prohibiting the company from importing its Symbiq medication infusion pumps, manufactured in Costa Rica, into the US is another challenge for the company. 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 #3 (Hold) in the short run. Favorably placed stocks in medical sector include Advaxis, Inc. ( ADXS ) , CareFusion Corporation ( CFN - Snapshot Report ) and Edwards Lifesciences Corporation ( EW - Analyst Report ) . All three stocks carry a Zacks Rank #2 (Buy).