Hospira CEO Ball says it's getting 'gators' under control

Hospira says the remediation work it is doing at several plants has uncovered new problems, requiring recalls and additional work, but says it is getting the "gators" under control and expanding production.

The supply interruptions and cost of fixing plants contributed to a second-quarter loss, but Hospira ($HSP) will end up benefiting from the ordeal, CEO F. Michael Ball says.

"Using the swamp analogy I've referenced over the past several quarters, we are draining the swamp and dealing with the gators we have uncovered," Ball told analysts in a conference call after releasing earnings Tuesday. "It takes time and money, and there may be additional gators yet to be uncovered along the way. ... That said, I know we'll get through this. It's a matter of when, not if. And when we do, we'll be in a much stronger competitive position."

Hospira has been undergoing the major upgrade since the first of the year, after the company and the FDA found a long list of problems at plants in Rocky Mount and Clayton, NC, Austin, TX, and Boulder, CO. Its manufacturing processes contributed to such problems as overfilled drug injectors and particulates in vials. Recalls and the supply interruptions have resulted in shortages of a number of anesthesia and other drugs.

Much of the call was devoted to bringing investors up to speed on the progress at the plants. Ball says that while upgrades continue at Rocky Mount, the facility will run at 60% to 70% capacity through the third quarter and increase "modestly" through the year.

In Clayton, the company found issues with a water injection system and particulates in final product in test batches that kept Hospira from releasing any significant product during the quarter and resulting in a shortage of propofol. It also created problems for some contract manufacturing customers, but again Ball says progress is being made. The company also is reviewing and addressing issues with its device plant in Lake Forest, IL.

- read the earnings call transcript 
- here's the Reuters story 

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