A tale of two shortages: Spectrum's Fusilev reels as generics reappear, Hikma injectables grow 83% in U.S.

Drug shortages have wreaked havoc on hospitals and drugstores over the past couple of years. They've also prompted a considerable amount of jockeying on the supply side of things. Some companies have managed to profit off the missteps of their competitors, like Hikma Pharmaceuticals, which saw its generics injectables business grow 47% last year.

But growth on the back of shortages can backfire. What happens when a shortage eases? For a case study, look no further than Spectrum Pharmaceuticals, whose stock is taking a wallop. Yesterday, the company admitted that demand for its drug Fusilev was off. Way off.

Spectrum says that Fusilev sales would amount to $90 million at most this year, with $10 million to $15 million of that coming this quarter. That's a drop of more than half from 2012, when the company posted $204 million in Fusilev sales.

Why? Fusilev, or levoleucovorin, competes with generic leucovorin, which has been running scarce for the last couple of years. In October, FDA approved a new version of leucovorin from Sagent Pharmaceuticals, which has fueled its own growth by targeting drugs whose supplies are thin. That boosted leucovorin supplies, and that, in turn, cut into Fusilev's sales.

As Spectrum was suffering on its branded drug's swoon, Hikma was reporting a 19% increase in profits, thanks to that big growth in its injectables business. In the U.S., where it has taken advantage of its rivals' supply problems, that business grew 83% last year. (Hikma has had some manufacturing problems of its own, but at a plant that makes tablets rather than injectables.)

Hikma has been so successful in that market, it's attracting potential buyers. Earlier this month, the company said it was reviewing its options for the injectables business. A sale could be worth up to $1.6 billion, analysts say.

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