03.08.2012 • NewsFreseniusKabigenerics

Fresenius May Lift Outlook Again on Rivals' Shortages

German healthcare conglomerate Fresenius may raise its 2012 profit outlook for a third time this year as its injectable generic drugs unit Kabi continues to benefit from rivals' supply shortages.

"We are currently evaluating this new situation," a spokesman for Fresenius told Reuters on Friday, referring to the supply conditions.

He said Fresenius might update its outlook before it publishes its next quarterly earnings figures on Oct. 31, once it has a clearer picture on how the shortages affect the Kabi unit's guidance.

Kabi's U.S. business, formerly called APP Pharmaceuticals, is winning windfall profits from rivals' production blunders, which have caused shortages in the supply of dozens of injectable generic drugs including the widely used anaesthetic propofol.

Since March, Fresenius is the only supplier of propofol in the U.S., after generic drugmaker Hospira had to close down its production temporary.

So far, Fresenius has expected that Hospira would restart to deliver propofol in August, and based its guidance on this assumption. But on Wednesday, Hospira's Chief Executive Michael Ball conceded that it may take several additional months, which would reap Fresenius extra profits.

"If all goes according to plan, we should be back up and manufacturing sometime in the third quarter and releasing product in the fourth quarter," Ball said in an conference call with analysts.

In June, Fresenius said it saw 2012 net income before special items up by between 14 and 16%, adjusted for currency swings and excluding the effects of the planned takeover of Rhoen-Klinikum. It had already raised its net profit growth outlook to between 12 and 15% in April.

The growing drug scarcity is a serious issue for U.S. hospitals, blamed by health officials on industry consolidation that has left only a handful of generic manufacturers of these drugs, even as the number of drugs going off patent is growing.

Some drugmakers have been plagued by manufacturing problems that have shut down plants or production lines, while others have stopped producing a treatment when profit margins erode too far.

 

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