Hospira, Inc. (NYSE:HSP)
Although Hospira holds the number one position in the specialty injectables market with a market share of 18 percent, the stock is pressured by litigation issues. For example, in 2010 the company reached a settlement with Sanofi-Aventis to resolve patent litigation concerning the company's U.S. sales of its oxaliplatin injection, a generic version of Sanofi-Aventis' oncolytic agent, Eloxatin. Under the settlement terms, Hospira stopped selling oxaliplatin injection in the U.S. in June, 2010, and can relaunch the product in the U.S. only after on August, 2012.
I expect the company's near-term results to be pressured by higher R&D investment and more than $200 million in medical device unit remediation costs. Moreover, the long-term debt for HSP is $1.7 billion, while the net current assets are $1.675 billion, which is an indication of financial stress. Although I see some potential for upside in the long run, I don't expect HSP to recover from the recent share price losses by the end of Q4.
Endo Pharmaceuticals (Nasdaq:ENDP)
Endo has built a significant portfolio of branded pharmaceutical products to treat and manage pain. However, its products (Lidoderm, Opana ER and Opana, and Percocet) and geographic concentration in the U.S. are causes of concern. For instance, sales of Percocet declined 4 percent in 2010 to $121 million, or 7 percent of total sales ($127 million in 2009, 9 percent), while sales of Frova were largely flat at $59 million in 2010, compared with $58 million in 2009.
In the last two quarters, the company's financial performance fell short of analysts' consensus estimates. Moreover, long-term debt for ENDP is $3.4 billion, while net current assets are $454.4 million, which is an indication of financial stress. By the end of Q4, I expect the shares to test a new 52-week low.
Sanofi SA (ADR) (NYSE:SNY)
Although SNY holds a top 10 position in the global ethical pharmaceuticals industry, generic competition for some of its leading blockbuster drugs is leading to relatively low pharmaceutical sales growth. For instance, it is the emergence of generic competition to Plavix in the E.U., some years earlier than Sanofi had anticipated, that continues to prove particularly damaging to its top-line growth. In July 2010, Sandoz commenced the U.S. launch of Lovenox's first generic version.