Novartis' Sandoz unit stumbles again

Novartis ($NVS) CEO Joseph Jimenez has received another letter from the FDA again reminding him that his Sandoz generic drugs unit needs to get its manufacturing in shape. This time, it is for a plant in Austria that Novartis picked up in its $1.3 billion buyout of Ebewe Pharma, a specialist in generic cancer drugs.

The warning letter for the plant in Unterach am Attersee said managers there turned their back on FDA instructions, given several times in writing and verbally, not to release some products in the U.S. because of particles visible in some vials. With at least 10 batches making it through the plant's visual inspection process with particles in them, the agency said it is concerned the plant's process is not "robust" enough.

Novartis said today it did not expect any product recalls or supply interruptions because of the FDA action, but said it took the issue very seriously. "We remain deeply committed to fully addressing all outstanding issues and meeting all quality standards," Ameet Mallik, Sandoz' head of biopharmaceuticals and oncology injectables, said in a statement.

Novartis acquired Ebewe in 2009 to flesh out its generic drugmaking with the Austrian company's extensive portfolio of generic oncology meds. However, not all of Sandoz's manufacturing problems have been inherited. The generics unit had three North American plants, two in the U.S. and one in Canada, cited in a 2011 warning letter. Late last year, the FDA removed one of them, a plant in Colorado, from its warning letter watch list. Jimenez has told analysts the other two are getting their operations up to FDA expectations. But issues at Sandoz persist, and last month the unit voluntarily recalled two lots of methotrexate sodium because particles were visible in them.

Long-running problems at its consumer health plant in Lincoln, NE, have also been a drag on earnings and a particular sore point for Jimenez. Jimenez said in April that after significant investments and delays in getting it fully operational, the company had decided to narrow the site's manufacturing focus to solids and powders and ax 300 workers, about 40% of the workforce there.

- here's the warning letter
- and the Sandoz statement

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