Teva says production halted at Rimsa plant at the request of Mexican regulator

Teva headquarters

Teva has halted production at the Rimsa plant in Mexico and idled some of the workers, laying the blame for the issues at the feet of the brothers with whom they are battling in court over the $2.3 billion buyout.

Teva ($TEVA) acknowledged today that Mexican authorities suspended manufacturing at the plant in October saying the action followed “discovery of the serious violations committed under the Espinosa brothers, Rimsa's former owners....We are working closely with the Mexican authorities in order to restore production and products to the market,” Teva went on to say.

With its business affected by the regulators’ action, Teva has “adjusted its workforce" but a company spokesperson later declined to say how many workers have been idled or how many remain employed at the facility. 

According to a translated story in Mexico’s El Economista, Mexico’s Federal Commission for Protection against Health Risks, or COFEPRIS, took its action in response to a complaint by Teva. The agency is now said to be verifying that the 140 products manufactured at the plant in Guadalajara meet quality, safety and efficacy standards. COFEPRIS expects to complete its analysis by year-end. 

Teva bought Rimsa last year as a platform for growth in that part of the world, with CEO Erez Vigodman talking up the Mexican drugmaker's relationships with doctors and its place in the Mexican market. The fallout over the deal came to light in September when Fernando Espinosa Abdala and Leopoldo de Jesus Espinosa Abdala filed suit in New York saying the Israeli company was suffering “buyer’s remorse” and looking for a way to exit the deal. They said the company had falsely accused them of fraud.

Teva shot back with a statement that the facts would show, “the sellers of Rimsa misled Teva, regulators, and the public and took active steps to conceal the violations that were committed.”

The legal fight is only one of a number of issues that have dogged the company’s share price and led some investors to question whether CEO Vigodman is doing a good job. The company recently completed the $40.5 billion acquisition of Allergan’s generic business, another deal in which some investors have wondered if the drugmaker overpaid.

The Rimsa plant is not the only facility that Teva has offline right now. Teva suspended production at a sterile manufacturing plant in Hungary earlier this year after an FDA inspection found issues. The FDA has since banned the plant’s products from the U.S. and last month slapped it with warning letter citing “significant” problems with sterility.