Hospira, Inc. (NYSE:HSP)’s specialty injectable pharmaceutical, or SIP, is the major contributor to its revenue. The company reported revenue of $988.3 million; SIP has shown growth of 11.1% year-over-year, to $651.5 million in the first quarter that ended in March 2013. SIP includes generic injectable pharmaceutical and biological products. The company is among the top three players in the biological products market.
One of the SIP drugs, Precedex, has received a patent protection extension from the FDA for six months in the U.S. This drug is used in sedation treatment and is the major contributor to the SIP revenue. It is expected to contribute around $271 million, or nearly 7%, of total revenue in 2013.
The company anticipates SIP will generate revenue of around $2.72 billion in 2013 compared to $2.57 billion in 2012.
Acquisition expands company’s global reach
Elan Corporation, plc (ADR) (NYSE:ELN) plans to acquire 48% stake in Newbridge pharmaceuticals for $40 million in 2013, and the rest of the stake by 2015 for an additional $244 million. Newbridge is a specialty therapeutics company, operating in Dubai. Its drugs are already approved by the FDA, EMA, and Japanese PMDA and are used to treat oncology, metabolic disorders, and intestine problems.
It also specializes in licensing, acquiring, registering, and commercializing drugs in the Middle East and North Africa, or MENA. Elan believes that these regions possess untapped growth opportunities, as its healthcare contributes 4%-6% of GDP as compared to 10%-12% in Europe and 18% in the U.S. Also, the awareness and capacity to afford medical treatment in the MENA region has increased, thus, Elan believes this acquisition will generate good growth opportunities.
In April 2013, Elan Corporation, plc (ADR) (NYSE:ELN) sold the full rights and control of its multiple sclerosis drug, “Tysabri,” to Biogen Idec Inc. (NASDAQ:BIIB) for $3.25 billion, and ongoing royalty interest on global Tysabri sales. The drug is used for the treatment of inflammatory intestine disease, and relapsing forms of multiple sclerosis, or MS. Elan Corporation, plc (ADR) (NYSE:ELN) will receive a royalty of 12% for the first 12 months on global Tysabri sales, thereafter the percentage will increase to 18% on drug sales of less than $2 billion, and 25% for sales over $2 billion.
Tysabri is considered the most effective drug for MS patients. In 2012, Tysabri reported a year-over-year growth of 8% to $1.6 billion and Biogen’s continuous efforts to increase the drug’s awareness will help it to grow further. Elan Corporation, plc (ADR) (NYSE:ELN) expects royalties of around $515 million in 2013 from Tysabri sales.
Conclusion
Valeant Pharmaceuticals Intl Inc (NYSE:VRX), with its acquisitions, has enhanced its presence in the eye care and skin care markets, which will drive the company’s earnings and its growth prospects.
Hospira, Inc. (NYSE:HSP) has strong expectations from its SIP segment, which is continuously driving revenue and has strong growth opportunities in 2014 and 2015. Additionally, its acquisition of Orchid’s API unit will help in strengthening its API products capacity.
Sales of its blockbuster drug, Tysabri, should enable Elan Corporation, plc (ADR) (NYSE:ELN) to earn regular royalty income and the upfront sale of $3.25 billion provides the ability for further expansion of its operations. The acquisition of Newbridge opens opportunities for the company in the oncology segment.
Due to strong acquisitions and growth potential, a buy is recommended for all three stocks.
Madhu Dube has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article 3 Pharma Companies to Buy for the Long Run originally appeared on Fool.com.
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