If Generic Injectable Shortages are Nearing an End, What can Hospira do?
FYI- Google title or for non-wimps, go to the website - WSJ blog pharmalot, direct link -
HSP employees - just use your personal technology and internet service - and do it off the clock. Hospira intimidation can't infringe on your personal rights.
http://blogs.wsj.com/pharmalot/2014...le-shortages-near-an-end-what-can-hospira-do/
By Ed Silverman
We asked Hospira for comment and will update you accordingly. [UPDATE: A Hospira spokeswoman declined to comment.]
Is the shortage of generic injectable medicines nearing an end? And what does this mean for Hospira, which is one of the biggest suppliers?
Over the past few years, shortages emerged due to various factors, notably tougher FDA enforcement that crimped production as manufacturers attempted to correct quality-control issues. This scenario also allowed for price hikes, at least for some medicines, as some manufacturers discontinued certain products. Price increases began in 2012, just after shortages peaked in 2011.
But the trend appears to have topped out and recent developments suggest supplies for some medicines are gradually increasing, according to Sanford Bernstein analyst Ronny Gal. And the implication is that relying on future prices increases to boost financial results may no longer be attainable. He points to Hospira, in particular.
In an investor note, Gal points to FDA data showing that the number of shortages of injectable medicines peaked in 2011 at around 175 and, last year, returned to levels not seen since 2008. But Gal notes that it generally takes two years to resolve a typical shortage, so he suggests that the pricing “cycle appears to be winding down.”
This means that, as the number of shortages continue to wane, some manufacturers will find they have less pricing power. While some price hikes may be possible over the very near term, “further broad-based price improvements are unlikely,” he writes.
However, it also remains “too early” to know if prices will come down. Why? He notes that generic injectable medicines are commodity products that are sold to hospitals. Although hospitals are sensitive to cost, quality and safety have been under a microscope. So while Gal notes “price declines are possible,” he believes that hospitals are “reasonably apprehensive” about adding multiple suppliers.
So what does this mean for Hospira, which has received numerous FDA warning letters and troubling inspection reports in the last few years? The upshot is that Hospira will “have to rely on manufacturing cost reductions, new launches and biosimilars to pick up the slack.”
We asked Hospira for comment and will update you accordingly. [UPDATE: A Hospira spokeswoman declined to comment.]
FYI- Google title or for non-wimps, go to the website - WSJ blog pharmalot, direct link -
HSP employees - just use your personal technology and internet service - and do it off the clock. Hospira intimidation can't infringe on your personal rights.
http://blogs.wsj.com/pharmalot/2014...le-shortages-near-an-end-what-can-hospira-do/
By Ed Silverman
We asked Hospira for comment and will update you accordingly. [UPDATE: A Hospira spokeswoman declined to comment.]
Is the shortage of generic injectable medicines nearing an end? And what does this mean for Hospira, which is one of the biggest suppliers?
Over the past few years, shortages emerged due to various factors, notably tougher FDA enforcement that crimped production as manufacturers attempted to correct quality-control issues. This scenario also allowed for price hikes, at least for some medicines, as some manufacturers discontinued certain products. Price increases began in 2012, just after shortages peaked in 2011.
But the trend appears to have topped out and recent developments suggest supplies for some medicines are gradually increasing, according to Sanford Bernstein analyst Ronny Gal. And the implication is that relying on future prices increases to boost financial results may no longer be attainable. He points to Hospira, in particular.
In an investor note, Gal points to FDA data showing that the number of shortages of injectable medicines peaked in 2011 at around 175 and, last year, returned to levels not seen since 2008. But Gal notes that it generally takes two years to resolve a typical shortage, so he suggests that the pricing “cycle appears to be winding down.”
This means that, as the number of shortages continue to wane, some manufacturers will find they have less pricing power. While some price hikes may be possible over the very near term, “further broad-based price improvements are unlikely,” he writes.
However, it also remains “too early” to know if prices will come down. Why? He notes that generic injectable medicines are commodity products that are sold to hospitals. Although hospitals are sensitive to cost, quality and safety have been under a microscope. So while Gal notes “price declines are possible,” he believes that hospitals are “reasonably apprehensive” about adding multiple suppliers.
So what does this mean for Hospira, which has received numerous FDA warning letters and troubling inspection reports in the last few years? The upshot is that Hospira will “have to rely on manufacturing cost reductions, new launches and biosimilars to pick up the slack.”
We asked Hospira for comment and will update you accordingly. [UPDATE: A Hospira spokeswoman declined to comment.]