Feb. 14 (Bloomberg) -- Hospira Inc., the maker of generic injectable drugs, gained the most in almost five months after the company said a factory cited for manufacturing deficiencies had reopened and was near previous production levels.
Hospira climbed 6.1 percent to $36.30 at the close of New York trading, for its biggest one-day gain since Sept. 23. Fourth-quarter profit excluding one-time items was 51 cents a share, the Lake Forest, Illinois-based company said in a statement earlier today. The results beat the 47 cent average of 14 analyst estimates compiled by Bloomberg.
The Food and Drug Administration cited Hospira’s Rocky Mount, North Carolina, plant in April 2010 following four drug recalls. After a December shutdown, the factory is now operating at about 60 percent to 70 percent capacity, close to where it was before the closing, Chief Executive F. Michael Ball said on a conference call with analysts today. The FDA hasn’t raised the possibility of a consent decree that might bring more penalties, he said.
“The fact that there is no consent decree in the near-term” cheered investors, said Louise Chen, a Stewart Collins LLC analyst in New York, in a telephone interview. “Now, you know the bottom and that’s helpful.”
A consent decree could lead to a longer shutdown at Rocky Mount, Chen said. The factory’s products accounted for about a quarter of Hospira’s $4.06 billion in sales last year, the analyst said.
Profit excluding one-time costs may be $2 to $2.30 a share this year, a drop from $3.04 in 2011, the company said. The forecast was below the $2.47 average of 15 analyst estimates compiled by Bloomberg. Hospira said fixing problems at Rocky Mount and other facilities, as well as efforts to expand capacity, will shave 66 cents a share off of 2012 earnings.
Hospira announced new management at Rocky Mount in a statement yesterday, and appointed a companywide senior vice-president of quality. It’s also brought in consultants to review the plants and is making further changes to “processes and procedures” at the North Carolina facility, said a spokesman, Daniel Rosenberg, in an e-mail.
Ball said he still expects the quality overhaul to cost about $300 million to $375 million. He said he’d had no discussions with the FDA about signing a consent decree.
“We are doing the best job possible of getting the situation fixed, continuing to dialogue with the FDA to ensure that they are on board and know what we’re doing,” Ball told analysts. “And I think that in that respect moving forward, I like our chances.”
Hospira had a fourth-quarter net loss of $214 million, or $1.30 a share, compared with net income of $60.6 million, or 36 cents, a year earlier, the company said.
The “OK” quarter defied expectations, Chen said in an e-mail. The company credited strong sales of docetaxel, its chemotherapy drug, for the results and will have to show investors the gains are sustainable, she said.
Hospira, in a separate statement, said it was working with the FDA to increase production of methotrexate, a cancer drug used to treat childhood leukemia. Supplies have run low since Boehringer Ingelheim GmbH shut its Ben Venue Laboratories factory in Ohio last year after manufacturing problems there.
Hospira is “working urgently to help resolve the methotrexate shortage,” said Thomas Moore, its president of U.S. operations, in the statement on the company’s website. The drugmaker is working with FDA to qualify a second supplier of the medicine’s active ingredient to enable increased production, according to the statement.
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