Analysts ponder takeover of ailing Hospira

Bloomberg speculates generics-maker Hospira ($HSP), currently limping with GMP remediation efforts across multiple manufacturing sites, is becoming attractive as a takeover target to other generics producers. The Chicago-area drugmaker's stock has dipped 49% percent this year (as of Dec. 2), which translates to $4.6 billion in shareholder value.

Capstone Investments names Germany's Fresenius SE and Teva Pharmaceutical ($TEVA) as potential acquirers, according to the story. Fresenius subsidiary Fresenius Kabi Pharmaceuticals ($APCVZ) holds Chicago-area generics maker APP Pharmaceuticals ($APPX) as a subsidiary.

Fund manager Maria Mendelsberg of Cambiar Investors, which owns more than 2 million Hospira shares, says the company's appeal stems from its "unique franchise. Even before all this happened I thought it could be an attractive takeout," according to Bloomberg. She hopes Hospira can resolve its GMP troubles, "but when you're dealing with the FDA you just don't know what's going to happen."

Hospira could boost the market share of either Fresenius or Teva in the specialty injectable generic drug space, which Capstone figures is growing at about 5% per year. In fact, Hospira, APP and Teva are among the top suppliers of generic injectables, currently a major category of drugs identified by the FDA as being in short supply.

Hospira's current situation is reminiscent of Genzyme's in the months preceding its takeover by Sanofi ($SNY). Major manufacturing problems and sustained FDA attention, culminating in a consent decree, diverted the company's business focus to manufacturing remediation. Activist investor Carl Icahn (photo) noticed and successfully lobbied for board positions. After Icahn's assault came the Sanofi overtures and acquisition.

- see the Bloomberg story