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Hospira confident 'swamp is drained' as US FDA ups status of Rocky Mount

By Dan Stanton+

13-Feb-2014

Good news for the Rocky Mount facility: 'Perhaps a gator in the mud, but the swamp is drained.'
Good news for the Rocky Mount facility: 'Perhaps a gator in the mud, but the swamp is drained.'

The US FDA has upgraded Hospira’s troubled Rocky Mount, North Carolina plant to VAI (voluntary action indicated) status though its 2010 Warning Letter still stands.

GMP and quality system violations led the US Food and Drug Administration (FDA) to issue the manufacturing site with the warning in April 2010 , and Hospira has since invested over $200m (€146m) in remediation efforts.

However, during a conference call discussing end of year results yesterday, CEO Michael Ball told stakeholders Rocky Mount - along with another troubled sterile injectables plant in Austin, Texas  - had reached another regulatory milestone in its return to full production.

“We were recently verbally advised by the FDA that the status of our Austin facility and the pharmaceutical operations at Rocky Mount have been changed to VAI [voluntary action indicated] status,” he said. “[This] will free us to pursue new product approvals and export certificates for the site.”

“The change in status to VAI really is a special moment for us, really the first public acknowledgment that we've made that type of progress that I've been talking about,” he added. “We've kept our commitments and the FDA is in favour of our plans moving forward.”

However, whilst he attributed the change of status to the progress Hospira has made in its remediation response, the Warning Letter “cannot be lifted until Rocky Mount has a successful re-inspection.”

When asked when this was likely to occur, Ball was unable to give a specific date but suspected it would be 12-18 months from the last inspection in February 2013 which ended with a Form 483 with 20 observations .

Gators in the swamp

Asked by Gregory Gilbert, an analyst from Bank of America Merrill Lynch, for a “gator update,” as to whether he was confident all the problems had been found, Ball continued the analogy, replying:

“I never say never in terms of the gators but I think we've got the swamp drained. There might be one or two hiding deep in the mud but I think we've pretty much dug most of the stuff out.”

Rocky Mount is the focus of Hospira’s regulatory woes but the firm has also had Warning Letters and 483s at a number of its other plants, including its API facility in Boulder, Colorado , its IKKT sterile injectables facility in India and at several device manufacturing sites the US and Costa Rica .

Despite this, the company remained upbeat that business is continuing as normal, with Senior VP Sumant Ramachandra telling investors Hospira has “been getting approvals from the FDA regardless of [the] status in the facilities.”

“We’ve actually been getting both tentative approvals and final approvals on a variety of products over the last couple of years and we have multiple facilities that we make these products from,” he said on the call.

For the full year, Hospira reported total revenue of just over $4bn (€2.9bn), a 2% drop on 2012.The firm made a net loss of $8.3m for the year, though for the fourth quarter alone it reported a profit of $33.5m, up 532% on the same period last year, partly due to a 3.5% drop in operating costs.

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