Hikma is getting quality issues at a plant in New Jersey under control, reintroducing products and paying for the work by riding an unexpected surge in sales tied to a shortage of the antibacterial drug doxycycline.
The Jordan-based company last year received a warning letter for the plant in Eatontown operated by its West-Ward division and in November decided it must temporarily close it to get problems resolved. But Hikma said in an earnings update Monday that the plant is now "slowly reintroducing products to the market."
Susan Ringdal, vice president of corporate strategy and investor relations at Hikma, said in an email Monday that while the company is still doing remediation at the Eatontown facility, it has been able to restart production of some products, including doxycycline. It also makes the drug at an FDA-approved plant in Jordan. "We would attribute recent demand for doxycycline to the increased incidence of Lyme disease during the summer months," Ringdal said.
The FDA warned healthcare providers in January that there was a shortage of doxycycline tied to manufacturing problems with some suppliers. The drug is prescribed for treating Lyme disease, some sexually-transmitted diseases, and some other conditions, including exposure to anthrax. The FDA drug shortage website indicates that the product is now available, but in the meantime, news reports say prices for the drug have skyrocketed. A March story by the Los Angeles Times said the price for one patient's prescription went to $165 for 60 pills from $4.30 previously.
In May, Hikma explained that it would take a charge of $25 million to $30 million this year to pay for the upgrades at the plant but expected sales of doxycycline to cover that cost and make up for lost sales from the plant. It reiterated Monday that sales of the drug continued to produce well enough that it has raised its sales forecast for the year.
"Given the excellent performance of doxycycline, we are raising our full year guidance for this business to revenue of around $200 million with a reported operating margin of above 30%," the company said. In May it had pegged annual revenues for its generic business at about $150 million and said operating margins would be in the low teens.
The company's sterile injectables business has also been generating good returns. It has also been the beneficiary of drug shortages tied to regulatory problems at competitors' plants. The company had considered selling the business after receiving some unsolicited interest from potential buyers but decided in April it would hold onto it.