Hospira (HSP)

Q1 2011 Earnings Call

April 26, 2011 9:00 am ET

Executives

Karen King - Vice President Investor Relations

Michael Ball - Chief Executive Officer, Director and Member of Science, Technology & Quality Committee

Thomas Werner - Chief Financial Officer and Senior Vice President of Finance

Christopher Begley - Executive Chairman and Member of Science, Technology & Quality Committee

Analysts

Matthew Taylor - Barclays Capital

David Roman - Goldman Sachs Group Inc.

Frederick Wise - Leerink Swann LLC

Christopher Schott - JP Morgan Chase & Co

Marshall Urist - Morgan Stanley

Paul Choi - Caris & Company

David Buck - Buckingham Research Group, Inc.

Louise Chen - Collins Stewart LLC

Presentation

Operator

Welcome to Hospira's First Quarter Earnings Conference Call. [Operator Instructions] I'd like to turn the conference over to Karen King, Vice President of Investor Relations. Karen, you may now begin your conference.

Karen King

Thank you. Good morning, everyone and welcome to our conference call and webcast regarding Hospira's financial results for the first quarter of 2011. Participating in today's call are Chris Dagley, Executive Chairman of Hospira; and Tom Werner, Senior Vice President of Finance and Chief Financial Officer. We would also like to welcome Mike Ball, Hospira's new Chief Executive Officer to our quarterly conference call. We're thrilled to have Mike as our new CEO. Given his short tenure, on today's call, Mike will only be providing introductory remarks. Chris and Tom will help walk you through the quarterly performance and address your questions. I know many of you are eager to meet Mike and we have plans in the works to introduce him to you. Mike is looking forward to sharing his thoughts on our strategy and the broader opportunity he sees at our Investor Day, which will be on August 31 sure [ph] at our offices in Lake Forest. We picked a warm month so travel should be easy. Hopefully, you can stay and take advantage of all our great city of Chicago has to offer.

Now moving to our first quarter call. We'll be making some forward-looking statements today, which is subject to risks, uncertainties and other factors and may cause actual results to differ materially from those indicated. A discussion of these factors is included in the Risk Factors and MD&A section in Hospira's latest annual report on Form 10-K and subsequent Form 10-Qs on file with the SEC. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments. In today's conference call, non-GAAP financial measures will be used to help investors understand Hospira's base business performance. These non-GAAP financial measures are reconciled to the comparable GAAP financial measures in the press release and Form 8-K issued this morning and are also available on the Presentation page in our Investor Relations section of our website. Also posted on our website is a presentation of complimentary materials that summarize the points of today's call. We will not be speaking directly to the material, which is posted on the Presentation page at www.hospirainvestor.com. The materials for your reference to use as an enhanced communication tool. And with that, I'll now turn the call over to Chris.

Christopher Begley

Thank you, Karen and good morning, everyone. As many of you know, this is my last earnings call. I would like to start the call by thanking you for your support of Hospira during my time as CEO and for putting your trust in me over the past 7 years. I've had the privilege of working with an outstanding team of individuals at Hospira during that time. And I am very proud of what we have accomplished. I have watched Hospira grow from a fledgling startup to a respected industry leader. I now have the good fortune of viewing the company from a different perspective as Executive Chairman. And I am extremely pleased to be succeeded by an outstanding individual, Mike Ball. We found the perfect fit for the role of CEO with Mike, with his proven track record of growing complex multinational businesses; with his demonstrated success in leading diversified health-care portfolios; with his dedication to his employees and with his strong commitment to creating value for all company stakeholders. Hospira is in good hands. I know Mike is already formulating ideas on how to extend our growth trajectory, expand our global reach and ensure that we keep driving towards sustainable top-tier financial performance. I will turn the call over to Mike so he can provide some perspective. Mike?

Michael Ball

Thanks, Chris for that warm welcome and hello, everybody. Needless to say, I am extremely pleased to have joined Hospira and I'm even more excited to be heading this company after my on-boarding experience over the past few weeks. I have literally met with hundreds of people, spending time on the road, visiting customers as well as back in the office, getting briefings from our senior management team and meeting with employees. I have met with every major function in the organization and I have been thoroughly impressed with the caliber of talent across the organization. Before accepting this position, when doing my final due diligence on Hospira, my sense was that the company's dual strategy of improving margins and cash flow and investing for growth was the right one. I'm even more convinced of that today. I see tremendous opportunity for future growth at Hospira. While we've done a good job of growing our businesses in the U.S. and maintaining our leadership positions, I see significant opportunity for further growth, both in the United States and around the globe. I look forward to sharing with you my thoughts and ideas on how we will take Hospira to the next level at our upcoming Investor Day in Chicago on August 31. But now, given that I was only here for 4 days in the quarter, I will let Chris walk you through the highlights. Chris?

Christopher Begley

The first quarter was a quarter marked by executing on our commitments, doing what we said we'd do at our last quarterly call. And they were significant commitments, ones that drive near-term gains and others that pave the way for future growth. We committed to launching docetaxel in the U.S. by the end of the quarter. We launched on March 17, shortly after receiving FDA approval. Docetaxel, which is used in the treatment of a variety of cancers, had branded U.S. sales of approximately $1.2 billion in 2010. We were the first generic to receive approval of our differentiated, single vial, 10-milligram per mL concentration, the original concentration that customers have used safely for many years and that we are already marketing in both Europe and Australia. We also received approval during the quarter to launch docetaxel in Canada. We committed to submitting our 510k application with the FDA for modifications to our Symbiq infusion system by the end of the quarter. We submitted the application on March 31. This submission, one of the first developed to align the recent FDA draft guidance for infusion devices, incorporates modifications we are making to further enhance the reliability of the infusion pump. We are working closely with the FDA to ensure that we are following all the guidelines of the new 510k draft guidance and will be ready to resume new customer shipments of Symbiq once the 510k is cleared. And we committed to bringing a highly qualified CEO on board by the end of the quarter. Mike joined us on March 28.

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