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Moody’s to Review Hospira Rating for Downgrade

By Pharmaceutical Processing | May 22, 2013

Moody’s Investors Service on Wednesday placed Hospira Inc.’s “Baa3” long-term debt rating under review for possible downgrade. The ratings agency said the move was based on a concern that the drug and medical device maker’s performance over the next few years remains uncertain as a result of costs related to its new product strategy and possible regulatory issues.

“Baa3” is the lowest investment-grade rating on Moody’s ratings scale.

Moody’s said that the drug and medical device maker’s new medical device strategy is designed to simplify its product line and will involve swapping out infusion pumps for some of its existing customers.

The ratings service said that cash payouts related to that strategy, along with remediation costs and the potential for lost sales once its branded injectable sedative loses patent protection, could boost the likelihood of a weaker credit profile over the long term.

Meanwhile, Hospira recently received a warning letter from the Food and Drug Administration related to an inspection at its Lake Forest, Ill. development site, boosting regulatory uncertainties, Moody’s said.

Hospira shares lost 61 cents to $35.31 in afternoon trading. The stock has traded between $28.62 and $37.78 in the past 52 weeks.

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