Problems at Hospira plants dog Pfizer and some of its clients

Ian Read
Pfizer CEO Ian Read told analysts Tuesday that persistent manufacturing problems at Hospira plants accounted for most of an 11% drop in sales in its Essential Health unit.

When Pfizer was preparing to shell out $15 billion for regulatory-challenged Hospira, executives assured investors and regulators that they had the skills to quickly resolve issues at the plants of the sterile injectables specialist. But it has turned out to be a harder job than they anticipated, taking a toll on Pfizer’s earnings and creating drug approval issues for it and some of its clients along the way.

While Pfizer Tuesday reported third-quarter earnings that beat Wall Street expectations, revenues for its Essential Health unit, into which Hospira was folded, were about $5.06 billion, off 11%.

Pfizer CEO Ian Read lauded other parts of that unit, growth in biosimilars and emerging markets, but pointed his finger at Hospira for the hit to sales.

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“Within our Essential Health portfolio, we have been experiencing supply shortages with some products. The shortages are primarily for products from the legacy Hospira portfolio and are largely driven by capacity constraints and technical issues,” Read said.

Read explained that when Pfizer acquired Hospira for $15 billion in 2015, his team was confident it would take only one to two years to integrate the manufacturing plants and resolve the majority of the supply chain issues. But despite its “robust action plan,” two years out, problems still confound.

“(W)e believe we will make substantial progress in 2018 towards reducing the sterile injectable shortages,” he said Tuesday.

While executives were not forthcoming on the call about the specifics of the problems, Hospira has a long history of plant problems. When the Pfizer buyout was announced, Hospira was laboring under warning letters at plants in Europe, North America, Asia and Australia, while the opening of a brand new plant in India had been delayed by FDA concerns that arouse a few weeks after the Pfizer deal was announced.

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Pfizer has sold or closed some of the troubled operations but one that has continued to dog the company is a facility in McPherson, Kansas, that it held onto. The plant was issued a scathing warning letter in February in which the FDA scolded Pfizer for its failure not to recognize long ago there were issues that needed addressing since the agency had cited five other Hospira plants for similar problems in four warning letters issued in 2010, 2013, 2014 and 2015.

The problems at McPhearson in June led the FDA to issue Pfizer a complete response letter for its proposed epoetin alfa biosimilar. Pfizer said the CRL relates to matters noted in the February warning letter.  

John Young, president of the Essential Health, unit Tuesday told analysts Pfizer has provided the FDA with its corrective and preventative action plan for McPherson, and has been “diligently working to address the items outlined in the warning letter.”

But the manufacturing problems at the McPherson fill-finish plant have bled beyond Pfizer, derailing the expected approval earlier this year of a generic of Teva’s long-acting Copaxone being developed by Sandoz unit and Cambridge, Massachusetts-based Momenta. The two already have a 20 mg Copaxone generic in the market but Momenta and Sandoz had expected to be first to market with the more valuable long-acting 40 mg Copaxone copy. They saw that chance eclipsed by the approval last month of a version from Mylan while they sat on the sideline waiting for Pfizer to resolve issues in McPherson.

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Momenta, which reported its own Q3 earnings today, is still holding out hope that it can have a significant play in that market.  

"We continue to believe in the potential for the approval and launch of Glatopa 40 mg in late 2017 or early 2018 and that there remains a meaningful market opportunity for this product in the U.S.," Momenta CEO Craig Wheeler said today in a statement.