Hospira thinks steps it took last week have fixed problems that disrupted contract manufacturing at a NC plant.
The production plant in Clayton, North Carolina was cited in a US Food and Drug Administration (FDA) warning letter in 2010 and since then Hospira has worked to improve quality. However, in March there was a blip which affected some of Hospira’s contract manufacturing clients.
“During the month of March, we encountered some manufacturing issues at the plant and elected to shut down production to investigate. This has...impacted certain contract manufacturing customers,” Michael Ball, CEO of Hospira, told investors this week.
The shutdown also created a temporary shortage of propofol. Last week Hospira completed its efforts to fix the problem and has restarted manufacture. A staged release of quarantined products is expected to begin in the coming weeks.
Efforts to fix the Clayton site are part of a broad quality push at Hospira as it looks to recover from multiple regulatory enforcement actions in recent years. A current focus on the work is the Rocky Mount production plant in North Carolina which featured in the same warning as Clayton.
“We have placed over 100 full-time employees at the plant since the beginning of the year. This is in addition to the more than 150 consultants we already have working on the plant floor with our employees and assisting us with our remediation efforts,” Ball said.
Investments in quality, plus relating factors like inventory losses, dragged gross margins down by five percentage points year-on-year. Gross margins are expected to drop further in the back half of 2012 as Hospira contends with scheduled - but extended - maintenance shutdowns.