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Hospira Inc.'s (HSP) first-quarter net income more than doubled behind a big tax-related gain while sales came in higher than expected with help from sales of fluid pumps and a business that makes drugs for other companies.

While tough economic conditions have created a drag on part of Hospira's business, and the company has also pushed back its timeline for launching a key generic antibiotic, it still boosted the low end of its full-year earnings guidance. A lower expected tax rate and benefits from an ongoing cost-cutting plan are expected to help offset the negative pressures.

The Lake Forest, Ill., company also reiterated on Tuesday its 2009 sales target.

First-quarter sales showed "resilience in a still-weak economy," Leerink Swann analyst Rick Wise said in a note to investors.

Investors responded favorably, lifting Hospira shares by 5.5% to $33.07 in recent trading. Shares reached $33.88 earlier, marking the highest point in about six months.

The company reported first-quarter net income of $165.5 million, or $1.03 a share, up from $65.4 million, or 41 cents a share, a year earlier. Excluding items, including a latest-quarter 57-cent gain from the settlement of a tax audit, earnings rose to 60 cents a share from 55 cents.

Analysts surveyed by Thomson Reuters had anticipated, on average, earnings of 55 cents a share in the recent quarter.

Net sales fell 3.3% to $859.7 million, reflecting the effects of unfavorable exchange rates and pricing pressure in specialty injectable drugs in the Europe, Middle East and Africa region, Hospira said. Still, sales edged above the Wall Street forecast and also topped the company's expectations.

Gross margin rose to 37.2% from 35.7%.

Hospira said sales in the Americas rose 1.6%, but the Europe, Middle East and Africa segment saw a 21% slide and the Asia-Pacific region had a 13% drop, with currency playing a big role.

Among Hospira's businesses, global specialty injectable drug sales slipped about 7.5% in the quarter, or 1.6% excluding currency, amid tough comparisons with the year-earlier period, said Terrence C. Kearney, the company's chief operating officer, on a call with analysts. He noted that sales for this business were flat in the Americas region excluding currency due in part to a mild winter flu season.

In the company's medication-management business, which includes fluid-delivery pumps, sales inched higher and grew by 6% when currency is excluded. Constraints in hospital budgets have affected sales a bit here, but Hospira ended 2008 with a strong backlog of signed contracts and is also picking up business from competitive accounts, Kearney noted.

Hospira competes in the pump market with Baxter International Inc. (BAX) and Cardinal Health Inc. (CAH). Both of those companies have experienced some product issues, particularly at Baxter, where its widely used pumps have been off the market for years due to a series of tough-to-resolve problems.

Sales in Hospira's contract-manufacturing business, which is part of the company's "Other Pharma" category that saw sales rise 4% in the quarter, were helped by a one-time demand boost related to customers replenishing inventory, Kearney said. Contract manufacturing involves the production of injectable products for other drug and biotechnology companies.

Looking ahead, Hospira said it is no longer including any anticipated results from a generic version of Wyeth's (WYE) antibiotic Zosyn in its full-year guidance. Additionally, "we don't believe we've seen the bottom of capital constraints resulting from the recession," said Thomas E. Werner, Hospira's chief financial officer, during the call.

Nevertheless, with help from a lower tax rate following the settlement and a cost-cutting plan that includes eliminating 10% of its work force, Hospira said it now sees its earnings excluding one-time items landing in a $2.67-to-$2.72-per-share range this year. The low end of that range is up 5 cents.

Meantime, Hospira continues to expect sales will grow 4% to 6% this year excluding the impact of currency rates, or to be flat when currency is included. Hospira's full-year revenue was $3.63 billion in 2008.

Analysts had projected full-year earnings of $2.67 a share on sales of $3.63 billion.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

(Mike Barris contributed to this report.)