When AMRI ($AMRI) bought Hyaluron in June 2010, it enjoyed a brief, two-month honeymoon before the FDA slapped the acquired sterile syringe and vial filling plant with a warning letter. The hangover has lasted three years, but now the agency has finally issued a letter to close out the failings it found at the Burlington site.
New York-based service provider AMRI paid $27 million to buy the site in 2010, but it did so at a time when the FDA was beginning the sterile injectable quality clampdown that also affected Ben Venue and Hospira ($HSP). It has taken AMRI three years to resolve all the issues raised in the warning letter to the satisfaction of the FDA, and even now it has an unrelated set of observations from a Form 483 filed in July to work through. The long-running regulatory saga has dragged on earnings at AMRI--prompting an analyst to call Burlington a "money pit" in 2011--but the company can now begin enacting the plan it envisaged when it bought Hyaluron.
AMRI has continued to work on clients' development projects at Burlington throughout the warning letter period, but the regulatory snafu--and its ability to affect drug approvals--has held back the site. It has also offset strong growth in other areas of the contract manufacturing business. Revenue from large-scale manufacturing services was up 15% in the third quarter, with the active pharmaceutical ingredient (API) plant in Rensselaer, NY, driving growth. The New York site is now operating at 80-85% of its capacity, but AMRI's other commercial production facilities continue to be underutilized.
Clearing the warning letter at Burlington should accelerate the process of rebuilding demand for its services, while AMRI has upgraded sites in Holywell, Wales, and in Aurangabad, India, to make them more attractive propositions to clients. AMRI has also invested in the successful Rensselaer facility to eliminate bottlenecks, notably in the finishing suite APIs pass through at the end of the production process.
- here's AMRI Burlington release
- check out its Q3 results
- and the call transcript