FDA smacks Hospira with nearly 2 dozen observations at India plant

Hospira ($HSP), having spent tremendous time and tens of millions of dollars, is getting on top of its manufacturing issues in the U.S. But the maker of mostly generic sterile injectable drugs also has production in India and acknowledges that it continues to face issues at a plant that received a warning letter in the spring. The FDA recently came back for a follow-up that turned up nearly two dozen observations.

The Lake Forest, IL-based drugmaker received the FDA warning letter in May for its plant in Irungattukottai detailing a variety of problems with sterility. It cited unsanitized surfaces, airflow questions and even the sterility of gloves worn by workers. The agency ordered Hospira to create a "global corrective action plan" for both its foreign and U.S. plants, including how it intends to train employees involved in aseptic processes. The drugmaker at the time said it took the matter seriously and would get on top of the problems pronto. But according to a filing filed Friday with the SEC, a follow-up visit concluded Dec. 10 resulted in a Form 483 with 23 observations. Hospira said in the SEC filing that it expects to get the majority of the observations addressed over the next several weeks and doesn't anticipate any interruption to its production.

Hospira CEO F. Michael Ball was upbeat during an earnings call last month, saying the company's progress on its $375 million remediation effort was paying off. Most of that money has been spent on its plant in Rocky Mount, NC, which has operated under a warning letter since 2010 and which has been cited with new observations since. Ball said the FDA recently informed the company that while there is still work to be done, it was pleased with aspects of the remediation process.

In a meeting with analysts this month, Ball noted that with the progress it has made, it is now looking at cutting costs and that it is counting on production in India to help achieve that. It is buying a plant from Orchid Chemicals & Pharmaceuticals and is also building a 1.1-million-square-foot manufacturing plant in Vizag, India. The Vizag operation will add about 500 million additional units per year, which Ball said would "have a profound effect on" Hospira's cost profile. Ball has said that Hospira has spent $200 million on Vizag but could spend more to ensure it avoids the quality pitfalls encountered by Rocky Mount. Ball also said that the company was implementing at Irungattukottai "the types of remediation programs there that were successful in our U.S. plants."

- here's the SEC filing