FDA looks at Baxter Mexico plant for more saline supply

Baxter CEO Robert Parkinson

Baxter International ($BAX) is working with the FDA to add a plant in Mexico to the list of providers approved to ship saline to the U.S. as a shortage of the solution plagues healthcare providers. But while the drugmaker is expanding production, it has also had to repeatedly recall lots of saline because of manufacturing missteps. On Friday, it issued yet another.

CEO Robert Parkinson told analysts during an earnings call last week that the FDA is in the process of reviewing Baxter's application to source saline from a manufacturing site in Cuernavaca, Mexico. Last year the agency worked with Baxter to prep a plant in Sabiñánigo, Spain, to U.S. standards so its saline could enter the U.S. supply chain. Parkinson said an approval would give the company more flexibility to meet demand.

"It also reflects our commitment to ensuring that we are optimizing our global supply and allocating or reallocating products to markets that generate enhanced returns aligned with our margin improvement goals," Parkinson said, according to a transcript from Seeking Alpha.

While the added production may be helping Baxter's financial goals, the product is not always hitting quality goals. Two days after Parkinson spoke, Baxter was recalling one lot of 0.9% sodium chloride solution because some containers might be missing port protectors, leaving open the possibility for contamination and posing a potential danger to patients. The recall indiated that no adverse events had been reported. 

"The two Baxter customers that received product from this lot have been notified. Patient safety is our priority, and we issued this voluntary recall to ensure no product from the affected lot remains in the field," Baxter spokesman John O'Malley said in a statement. "We regret any inconvenience."

It is not the first saline recall for Baxter, or the second or third. The company has had at least four recalls of saline in about a year's time. It is not alone in that regard. Hospira ($HSP), another of the big producers, has had to recall saline as well, including a recall last week of more than 310,000 bags, also because of possible leaky bags.

Each recall takes product off the market, which exacerbates the shortage that has been going on for about two years. It frustrates strides the FDA has made to increase supply. The FDA has worked not only with Baxter but also with Hospira, B. Braun Medical and Fresenius Kabi to boost their production to help relieve the situation. Besides the Baxter plant in Spain, the agency has approved a Fresenius Kabi plant in Norway and a B. Braun plant in Germany to begin shipping product to the U.S. But the ongoing manufacturing problems have led to more recalls, which has kept the U.S. supply chain from getting fully replenished.

- here's the release
- read the Seeking Alpha transcript (reg. req.)

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