KV Pharmaceutical's announcement yesterday of a de-listing warning from the New York Stock Exchange shows how great an impact manufacturing violations can have.
KV has been on a down escalator since 2008, when GMP violations at a Missouri generics facility led to product recalls, the FDA seizure of more than $24 million in products, and finally to shutdown of the plant. The company has since laid off more than three-quarters of the employees at its Ethex subsidiary, shuttered after the company pleaded guilty to criminal charges for not disclosing manufacturing problems and then agreed to pay $27.6 million in fines. Retailers, former employees and patients have initiated lawsuits. ETHEX contributed more than 60 percent of KV's revenue in 2008.
Marc Hermelin, CEO during those troubled months of 2008, departed amid alleged management irregularities. In stepped former Ethex CEO David Van Vliet as interim CEO in December 2008. He was sent packing six months later, as Ethex remained closed and revenues dwindled. In stepped Ther-Rx subsidiary president Gregory Divis as interim CEO. To keep itself afloat, the company sold its Particle Dynamics unit.
Meanwhile, its manufacturing comeback is still underway, led by Lachman Consultants and under a watchful FDA.
The de-listing warning is issued when a company's stock falls below the $1 minimum average closing price for 30 days. The drugmaker has six months to raise its average closing price to avoid delisting.
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