Is Hospira primed for a takeover?

CEO F. Michael Ball

Could sterile generic drugmaker Hospira, with its tarnished image and constant talk of remediation expenses, be a takeover candidate?

Investors' bible Barron's thinks so. It speculates that once Hospira ($HSP) finally gets its plant problems cleaned up and any threat of a consent decree behind it, some big players might see buying the company as a way to get into generic drugmaking. Calling Hospira "a giant in the high barriers to entry injectable drug market," it points out that its 37% market share is nearly twice that of the next largest competitor, American Regent.

In advance of Hospira's earnings report next week, the publication suggests that at the least, its stock is on the cusp of a rapid rise. As the drugmaker ramps up production levels this year, earnings should follow and a 20% escalation in price is not unrealistic, it says.

It argues that the $375 million the company has been plowing into three plants that fell under close scrutiny by the FDA because of manufacturing problems is money well spent. As CEO F. Michael Ball has suggested, those investments should make the plants among the most advanced and efficient in the industry. Barron's doesn't point out, however, that the company as recently as late last month again voluntarily recalled one lot of a product it said might contain mold.

More will be evident Feb. 13, when the company releases its year-end and quarterly results and updates investors on the progress it has made. Then Ball can say, in his colorful vernacular, whether Hospira has drained all of the swamps and eliminated all of the "gators."

- read the Barron's story (sub. req.)