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Bumpy road ahead for Hospira but issues “fixable”, CEO says

By Nick Taylor+

11-Jan-2012

Hospira will uncover more issues as it gets to the root cause of its quality troubles but the situation is “very fixable”, its CEO said.

Since the US Food and Drug Administration (FDA) sent a warning letter to its Rocky Mount, North Carolina plant in 2010 Hospira has been dogged by regulatory quality concerns. Hospira has committed $375m (€290m) to fixing its problems but has warned investors it will be “a bumpy road”.

Gators appear when you drain the swamp”, Michael Ball, CEO of Hospira, told an audience at the JP Morgan Healthcare Conference in San Francisco. These new issues will arise when you attempt to find the reasons behind quality issues and fix the root causes of the problems, Ball said.

To improve the plant Hospira is “pouring” people and resources into Rocky Mount, Ball said, and the issue “is very fixable”. Ball reached this conclusion after speaking to Quintiles and IHL Consulting Group, which are providing Hospira with regulatory support and also helped fix its Clayton, NC site.

Working with the FDA

At the start of 2012 Hospira sent an updated remediation plan to the FDA and it is waiting for the agency to respond to its revisions. Hospira and the FDA have weekly meetings, Ball said, and are working together to strike a balance between achieving compliance and minimising drug shortages.

So far the potential for a consent decree is yet to be raised in discussions between Hospira and the FDA, Ball said. Analysts have speculated that repeated quality problems at Hospira may prompt the FDA to issue a consent decree but Ball was unwilling to comment on the likelihood of that outcome.

Whatever route Hospira ultimately takes to compliance Ball is confident the process will strengthen the company. Barriers to entry seem to be increasing in the injectables sector, Ball said, so having high-quality production facilities will be a major competitive advantage for companies in the market.

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