Novartis plant delay, vaccine woes steal spotlight

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Manufacturing woes, actual and potential, overshadowed Novartis' ($NVS) earnings announcement today. In the realm of the actual, the company's Lincoln, NE, plant won't resume production by year's end as expected, because fixing problems there is taking longer than expected.

On the potential side, particles in Italian-made flu vaccine prompted action from regulators there and in Switzerland--but CEO Joe Jimenez defended the products. There's no threat to safety or efficacy with the Agrippal and Fluad vaccines, Novartis said. When asked whether the episode extends Novartis' recent spate of production failure, Jimenez said (as quoted by Reuters), "I do not think that is the case." A company update about the vaccines said, "these particles can occur in the vaccine manufacturing process."

Italian Health Minister Renato Balduzzi wasn't so sanguine. Balduzzi said he or his staff would meet with Novartis today, partly to find out why Novartis didn't flag the particle buildup before now. Officials said the company knew about the particles July 11, but didn't inform authorities till last week. About 488,000 doses are affected by the ban.

Meanwhile, in Nebraska, the over-the-counter drug plant isn't recovering as quickly as Novartis hoped. The company has outsourced at least some manufacturing for three brands--Lamisil, Excedrin, and Triaminic--so some individual products are making their way back to stores. But restarting internal production has proven ever more problematic, to the point where Jimenez won't hazard a guess at when the plant will restart. "[W]e have proven that we're not able to accurately project," he said (as quoted by Bloomberg).

The plant's problems hit Novartis sales once again: For the third quarter, OTC revenues dropped by 22%, to $938 million. The vaccines division saw sales drop by 11%, partly because of logistical problems, Deutsche Bank analysts said. "Vaccines were very weak ... and remain a drag," they wrote in an investor note (as quoted by Reuters). "Delayed shipments and lower flu sales are continuing to place investor focus on this problem area for the company."

- find the Novartis statement
- read the Bloomberg story
- get more from Reuters
- see the Swiss Info piece

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