Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. Hospira intends that these forward-looking statements be covered by the safe harbor provisions for forward-looking words such as "may," "will," "should," "anticipate," "estimate," "expect," "plan," "believe," "predict," "potential," "project," "intend," "could," or similar expressions. In particular, statements regarding Hospira's plans, strategies, prospects and expectations regarding its business and industry are forward-looking statements. Investors should be aware that these statements and any other forward-looking statements in this document only reflect Hospira's expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Many of these risks, uncertainties and assumptions are beyond Hospira's control, and may cause actual results and performance to differ materially from expectations. Important factors that could cause Hospira's actual results to be materially different from its expectations include (i) the risks and uncertainties described in "Item 1A. Risk Factors" in Hospira's Annual Report on Form 10-K for the year ended December 31, 2008 (the "2008 Form 10-K"), and (ii) the factors described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2008 Form 10-K, as updated by this Item 2. Accordingly, you should not place undue reliance on the forward-looking statements contained in this report. These forward-looking statements speak only as of the date on which the statements were made. Hospira undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

Hospira is a global specialty pharmaceutical and medication delivery company that develops, manufactures and markets products that help improve the safety, cost and productivity of patient care. Hospira's portfolio includes generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems. Hospira's broad portfolio of products is used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities.

Certain prior year amounts have been reclassified to conform to the current year presentation. Among other changes, during 2009 Hospira reclassified costs that were previously reported in Cost of products sold to Restructuring, a separate operating cost line item. The reclassifications did not affect net income or shareholders' equity.

Cost-Reduction and Optimization Activities

As part of its strategy to improve margins and cash flows, Hospira has taken a number of actions to reduce operating costs and optimize operations. The costs related to these actions consist primarily of severance and other employee benefit costs, accelerated depreciation resulting from the decreased useful lives of the buildings and certain equipment, relocation of production, process optimization implementation cost and other exit costs. Hospira will transfer related operations and production of the primary products from facilities impacted by these actions to other Hospira facilities, outsource certain product components to third-party suppliers, or cease activities entirely. Restructuring and optimization costs incurred for these actions during the three months ended March 31, 2009 and 2008 were $22.2 million and $7.8 million, respectively, of which $9.4 million and $3.0 million, respectively, were reported as Restructuring with the remainder reported primarily in Cost of products sold and Selling, general and administrative. For further details regarding the Restructuring related impact of these cost-reduction and optimization activities, see Note 4 to the condensed consolidated financial statements included in Item 1.

2009 Actions. In March 2009, Hospira announced details of a multi-stage restructuring and optimization plan ("Project Fuel") which will occur over the next two years. Project Fuel includes the following activities: optimizing the product portfolio, evaluating non-strategic assets, and streamlining the organization structure. Hospira expects to incur aggregate charges through 2011 related to these actions in the range of $140 million to $160 million on a pre-tax basis, of which approximately $100 million to $110 million are expected to be reported as Restructuring. During the three months ended March 31, 2009, Hospira incurred costs of $10.5 million of which $4.7 million is reported as Restructuring, with the remainder reported primarily in Selling, general and administrative.

2008 Actions. In April 2008, Hospira announced plans to exit manufacturing operations at its Morgan Hill, California plant over the next two years. During the three months ended March 31, 2009, Hospira incurred costs of $3.9 million of which $3.0 million is reported as Restructuring, with the remainder reported primarily in Cost of products sold.

2006 Actions. In February 2006, Hospira announced plans to close manufacturing plants in Ashland, Ohio, Montreal, Canada, and North Chicago, Illinois, and completed these plans in 2007, 2008, and in March 2009, respectively. During the three months ended March 31, 2009 Hospira incurred costs of $7.8 million of which $1.7 million is reported as Restructuring, compared to $7.8 million of which $3.0 million is reported as Restructuring during the

three months ended March 31, 2008. The remainder of costs incurred are reported primarily in Cost of products sold for the three months ended March 31, 2009 and 2008, respectively.

Mayne Pharma Integration

In connection with the integration of Mayne Pharma Limited ("Mayne Pharma") into its operations, Hospira incurred cash expenditures for the two-year period after the February 2, 2007 closing which reduced earnings, and operating and investing cash flow. These cash expenditures included integration expenses related to the closure of facilities, termination of lease agreements and employee-related benefit arrangements with the remainder related to purchase accounting items and capital projects. Cash expenditures were completed by the end of 2008. During the three months ended March 31, 2008, Hospira incurred $10.0 million of integration expenses reported primarily in Selling, general and administrative.

Results of operations for the three months ended March 31, 2009 compared to March 31, 2008

Net Sales

A comparison of product line sales is as follows:

                                 Hospira, Inc.

                           Net Sales by Product Line

                                  (Unaudited)

                             (dollars in millions)



                                   Three Months Ended March 31,
                                                          Percent
                                                          Change
                                                         vs. Prior
                                   2009         2008       Year
Americas-
Pharmaceuticals
Specialty Injectables           $    333.1    $  340.7        (2.2 )%
Other Pharma                         137.8       121.9        13.0 %
                                     470.9       462.6         1.8 %
Devices
Medication Management Systems        121.4       118.1         2.8 %
Other Devices                         92.4        93.5        (1.2 )%
                                     213.8       211.6         1.0 %

Total Americas                       684.7       674.2         1.6 %

EMEA-
Pharmaceuticals
Specialty Injectables                 57.6        78.3       (26.4 )%
Other Pharma                          27.7        36.6       (24.3 )%
                                      85.3       114.9       (25.8 )%
Devices
Medication Management Systems         19.1        20.4        (6.4 )%
Other Devices                         16.8        17.5        (4.0 )%
                                      35.9        37.9        (5.3 )%

Total EMEA                           121.2       152.8       (20.7 )%

APAC-
Pharmaceuticals
Specialty Injectables                 39.0        45.6       (14.5 )%
Other Pharma                           3.6         4.1       (12.2 )%
                                      42.6        49.7       (14.3 )%
Devices
Medication Management Systems          4.7         5.7       (17.5 )%
Other Devices                          6.5         6.3         3.2 %
                                      11.2        12.0        (6.7 )%

Total APAC                            53.8        61.7       (12.8 )%

Net Sales                       $    859.7    $  888.7        (3.3 )%

Net sales decreased (3.3)%. Excluding the impact of changes in foreign exchange rates Net sales increased 2.4%.

Americas

Net sales in the Americas segment increased 1.6%, or 3.9% excluding the impact of changes in foreign exchange rates. The decrease in net sales of Specialty Injectable Pharmaceuticals was due to significant wholesaler stocking in the prior year, partially offset by increased volume for anesthesia products including Hospira's proprietary drug Precedex® and the impact of competitor supply issues. Other Pharma net sales increased due to higher demand from certain contract manufacturing customers and increased large volume IV solutions sales due to Group Purchasing Organizations contract awards. Net sales in Medication Management Systems increased due to solid penetration, particularly for Symbiq®, Hospira's newest general infusion system. Other Devices net sales decreased due to price and the impact of changes in foreign exchange rates, partially offset by volume growth in gravity administration sets.

EMEA

Net sales in the EMEA segment decreased (20.7)%. Excluding the impact of changes in foreign exchange rates EMEA Net sales decreased (5.7)%. Specialty Injectable Pharmaceuticals net sales decreased primarily due to expected price decreases in oncology products, partially offset by sales of a newly launched biogeneric. Net sales of Other Pharma were lower due to declines in demand from certain contract manufacturing customers. Excluding the changes in foreign exchange rates, net sales in Medication Management Systems increased due to higher sales volume of ambulatory and large volume infusion systems.

APAC

Net sales in the APAC segment decreased (12.8)%. Excluding the impact of changes in foreign exchange rates APAC Net sales increased 7.9%. Excluding the changes in foreign exchange rates, Specialty Injectables net sales increased due to higher demand in certain anesthesia products including Hospira's proprietary drug Precedex®, anti-infective and oncology products. Excluding the changes in foreign exchange rates net sales in Other Pharma and Other Devices increased due to higher volume.

Gross Profit



                                                                        Percent
Three months ended March 31 (dollars in millions)    2009      2008     change
Gross profit                                        $ 319.6   $ 317.0       0.8 %
As a percent of net sales                              37.2 %    35.7 %

Gross profit, Net sales less Cost of products sold, increased $2.6 million, or 0.8%, for the three months ended March 31, 2009, compared with the same period in 2008.

The gross profit increase is primarily the result of favorable product mix and improved manufacturing performance. These increases were partially offset by the impact of changes in foreign exchange rates, and higher freight and distribution expense. Gross profit as a percentage of Net sales increased to 37.2% for the three months ended March 31, 2009, from 35.7% for the three months ended March 31, 2008.

Restructuring



                                                                    Percent
Three months ended March 31 (dollars in millions)   2009    2008    change
Restructuring                                       $ 9.4   $ 3.0     213.3 %
As a percent of net sales                             1.1 %   0.3 %

Restructuring increased $6.4 million, or 213.3%, for the three months ended March 31, 2009, compared with the same period in 2008. The increase in Restructuring was primarily due to severance and other employee benefit costs related to Project Fuel and Morgan Hill, California plant actions announced in March 2009 and April 2008, respectively. Restructuring, primarily severance costs, incurred for the three months ended March 31, 2008 was related to the action to close the North Chicago, Illinois manufacturing plant, which was completed in March 2009.

Research and Development



                                                                      Percent
Three months ended March 31 (dollars in millions)    2009     2008    change
Research and development expense                    $ 50.0   $ 49.9       0.2 %
As a percent of net sales                              5.8 %    5.6 %

Research and development ("R&D") expenses increased $0.1 million, or 0.2%, for the three months ended March 31, 2009, compared with the same period in 2008. The increase was primarily related to increased spending on device product development and increased spending on product development related to new compounds in Hospira's generic injectable drug pipeline, offset by the impact of changes in foreign exchange rates.

Selling, General and Administrative



                                                                        Percent
Three months ended March 31 (dollars in millions)    2009      2008     change
Selling, general and administrative expense         $ 145.5   $ 152.4      (4.5 )%
As a percent of net sales                              16.9 %    17.1 %

Selling, general and administrative ("SG&A") expenses decreased $6.9 million, or
(4.5)%, for the three months ended March 31, 2009, compared with the same period in 2008. The decrease was primarily due to the impact of changes in foreign exchange rates, partially offset by higher sales and marketing support costs in the EMEA and APAC segments due primarily to new product launches that occurred throughout 2008 and early 2009. In addition, the three months ended March 31, 2009 include process optimization implementation costs incurred under Project Fuel whereas the three months ended March 31, 2008 included expenses related to the Mayne Pharma integration which was completed by the end of 2008.

Interest Expense and Other Income, Net

Hospira incurred interest expense of $26.9 million for the three months ended March 31, 2009 and $31.4 million in the same period in 2008. The decrease was primarily due to lower debt outstanding in 2009 and lower interest rates on floating rate notes. Other (income), net was $(0.3) million for the three months ended March 31, 2009 compared to $(4.1) million for the three months ended March 31, 2008. The decrease is due to lower interest income and foreign exchange transaction gains and losses, net.

Income Tax Expense

During the three months ended March 31, 2009, the Internal Revenue Service ("IRS") audit of Hospira's 2004 and 2005 tax returns was completed and the years were effectively settled. The outcome of the audit settlement is a reduction in the gross unrecognized tax benefits for both the audit years settled and resultant impact on tax years 2006 through 2008 in aggregate totaling $100.7 million, of which $91.9 million is recognized in the results for the three months ended March 31, 2009 as a discrete income tax benefit. As a result, the effective tax rate was a benefit of 87.8% for the three months ended March 31, 2009, compared to an expense of 22.5% for the same period in 2008. Excluding the effect of the discrete income tax benefit, the effective tax rate for the three months ended March 31, 2009 was an expense of 16.4% which is less than 2008 due to lower unrecognized tax benefits in 2009, the re-enactment of the U.S. research tax credit, and decreased income in higher tax rate jurisdictions. The effective tax rates are less than the statutory U.S. federal income tax rate principally due to the benefit of tax exemptions, of varying durations, in certain jurisdictions outside the U.S.

Liquidity and Capital Resources at March 31, 2009 compared with December 31, 2008

Net cash provided by operating activities continues to be Hospira's primary source of funds to finance operating needs, capital expenditures, and repay debt. Other capital resources include cash on hand, borrowing availability under a $375.0 million revolving credit facility expiring in December 2010 and access to the capital markets. Hospira believes that its current capital resources will be sufficient to finance its operations, including debt service obligations, capital expenditures, product development and investments in cost reduction and optimization activities for the foreseeable future.