Hospira ($HSP) has taken a big financial hit as a result of manufacturing deficiencies at its Rocky Mount, NC, plant. The hit--more than $1 billion in market capitalization, according to the Financial Times--comes after the company announced significantly slower production at the plant in its third quarter financial report.
The Rocky Mount facility has been troubled since at least early 2010, when FDA inspectors found GMP noncompliance issues. In attempting remediation of the plant in collaboration with consultants, production slowed with the addition of new production-line equipment and quality procedures. In addition, some product batches were discarded due to quality concerns, the story says. Michael Ball, who became Hospira's CEO in March, said he's made changes in management.
Ball said the remediation job was "bigger than we thought," according to The Wall Street Journal. The plant accounts for 25% of company revenue.
The FT report quotes market analyst Gregory Hertz of Citibank, who said output "may not recover to previous levels." He added, "[t]he FDA thinks the Rocky Mount plant has reached the end of its useful life, which would have serious long-term consequences for Hospira."
In another blow, analysts suggested Hospira's attention to Rocky Mount has stalled a multi-year efficiency-improvement effort.