KV Pharma struggles with GMP comeback

At KV Pharmaceutical, inattention to manufacturing quality is playing out differently than at Genzyme. Unlike the case with Henri Termeer at the big biopharma, who recently survived an attempted board coup by Carl Icahn, KV's interim CEO David Van Vliet was sent packing just after its board welcomed new members.

KV is no Genzyme, and Van Vliet no Termeer, but the cases have enough similarities to allow for comparison of GMP-comeback techniques.

Both companies' troubles began in 2008: Genzyme's Boston-area plant caught a virus that eventually led to a factory shutdown for decontamination, while GMP violations at KV's Bridgeton, MO, plant led to product recalls and a plant shutdown by the FDA.

The latter was on the watch of veteran CEO Marc Hermelin, whose leadership ended in late 2008 amid alleged management irregularities. In stepped Van Vliet as interim CEO in December 2008. Van Vliet was formerly CEO of the company's Ethex subsidiary.

Since then, the Bridgeton plant remains shut down. The company has laid off more than three-quarters of its employees. And Ethex has been shuttered, after pleading guilty to federal charges for manufacturing anomalies.

KV is now suffering the uncomfortable existence of trying to stay in business without producing revenue-generating products, all the while working toward an FDA-approved comeback from its GMP-violation production halt. The company says it hopes the plant will resume operations later this year.

Van Vliet is now out. Gregory Divis, who is president of KV's Ther-Rx subsidiary, is interim CEO. The company just bought $24.6 million worth of time by selling its Particle Dynamics unit. It also signed a deal with Baxter to market and sell a Baxter-manufactured drug for the prevention of premature births.

That's the good news. The bad news is that KV faces lawsuits from patients and a $100-million suit from CVS Pharmacies for allegedly breaching a supply contract. Not to mention the high-end consultancy fees and costs for new equipment and employee training, and likely for additional manufacturing and QC staff.

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