Since the Rocky Mount, North Carolina received a US Food and Drug Administration (FDA) warning letter in 2010 leading to drug shortages, Hospira’s quarterly results have provided an opportunity to follow remediation efforts and supply updates.
In February the firm announced the plant had been upgraded to VAI (voluntary action indicated) status by the FDA but in a conference call yesterday discussing Q2 2014 results, CEO Michael Ball said the results of a recent inspection was “a major milestone” for Hospira.
“Five inspectors spent two weeks at the plant, and I am very pleased to report that this much-anticipated inspection resulted in zero observations,” he said on the call.
The warning letter is still to be lifted, but Ball said he was waiting to hear back from the FDA as to this next major milestone towards the back end of the year. However, the current situation indicates “the plant has returned to health,” and is able to introduce new products, as well as run levels close to full supply.
As part of its remediation efforts, the company was operating at less than 70% full capacity in early 2012 but Ball confirmed yesterday service levels were approaching “the acceptable level,” adding: “there's perhaps a little bit to go, but I would say that we're very close to the top end now.”
Rocky Mount is not the only facility in Hospira’s network to have suffered from regulatory enforcement. The firm’s new 1.1m sq ft sterile injectables facility in Andhra Pradesh was hit in Q1 by a 483 with ten observations.
However, Ball revealed it had received an untitled letter from the FDA this month taking issue with two of the firm’s responses to the 483. “We are working hard then to resolve those, and we will be back to the FDA in 30 days. And our expectation is that the FDA will find our responses satisfactory,” Ball said.
“Given the importance of this plant, we do expect that the plant should move ahead on schedule,” he continued. “Now we will be able to make commercial batches in the plant and are planning to do so at the end of the fourth quarter. The FDA inspection and subsequent approval is required to actually release those batches, so we are still working in the plant.”
Focus on M&A
While this quarter brought a further 483 (with 6 observations) to Hospira’s Lake Forest, Illinois device design and control centre, the firm remained positive its remediation efforts are paying off and Ball told investors the firm could begin looking at other areas of the business.
“My time is now much freer than it was, what I would say, one or two years ago, although I'm still at the forefront of our regulatory efforts,” Ball said. “One of the areas that I would definitely like to look at is, obviously, strategy, which includes M&A and other sources of competitive advantage.”
For the second quarter 2014, net sales rose 11% year-on-year to $1.1bn (€820m) whilst the firm’s bottom line grew 116% to $71m.