Gerresheimer adjusts earnings forecast lower in wake of FDA crackdown

Uwe Röhrhoff, Gerresheimer chief executive

The FDA's crackdown on manufacturing plants has triggered German drug packaging firm Gerresheimer AG to trim its financial outlook.

The company told reporters it had to stop manufacturing in the U.S. over the summer to make improvements after receiving warnings from the regulatory agency, which has recently been on a tear to address such issues. About 22% of Gerresheimer's sales come from the U.S., where it operates a plant in Peachtree, GA. Though the Düsseldorf-based company didn't say which of its clients were affected by the shutdown, one of its customers is Hospira ($HSP), which has been a target of the FDA for several years.

"The U.S. market is calming down, the decline will weaken, we expect an OK quarter," said Uwe Röhrhoff, Gerresheimer chief executive (as quoted by Reuters). "But also in this quarter in the U.S. we will not return to growth. It will take another two to three quarters."

Röhrhoff said on the conference call that sales grew at just 2% to €324 million ($409 million) for the third quarter. That number missed the average forecast of €328 million based on a Reuters poll of analysts. He said the company now expects full-year sales to grow by 4%, which is at the bottom of its previous forecast of a 4% to 6% range of growth.

Hospira, which has been dealing with regulatory concerns for years for plants in the U.S. and more recently in India, said in an SEC filing that it received a letter from the FDA about its plant in Australia that makes specialty injectable drugs. The company was told by the regulatory agency more than a year ago that it should have a "global corrective action plan" for both its foreign and U.S. plants.

- see the Reuters story