Hospira CEO looks to better days as 'swamp draining' nears end

Hospira CEO F. Michael Ball

When Hospira ($HSP) CEO F. Michael Ball discussed efforts to fix manufacturing quality failings in 2012, he warned the remediation project was likely to uncover a few "gators." In the end, Hospira found itself with a whole new swamp--on the device side of the business--but now believes it is nearing the end of its pharma fixes.

Having posted third-quarter results that beat expectations, Ball discussed the ongoing remediation of the Rocky Mount, NC, production plant. The plant has operated under a warning letter since 2010--which was followed by a Form 483 in March--despite Hospira spending considerable time and money to address the problems. Ball now believes these investments are starting to pay off. The FDA met with Hospira recently and, while the agency noted there is still work to be done, it was reportedly pleased with aspects of the remediation process.

"We received a written response from them, which really did confirm in writing that we had made significant progress, that they recognize the resources that we've put behind the Rocky Mount plant, the management changes, the addition of key quality and ops talent, our modernization efforts," Ball said. Hospira expects to have the bulk of remediation work finished by the end of the year, and is anticipating a FDA reinspection of the plant. If the FDA is satisfied with the progress, the inspection could ultimately lead to the regulator closing out the warning letter that has hung over the facility since 2010.

Rocky Mount is already nearing full production capacity, with Ball expecting just incremental gains over the next year as it begins to benefit from a new analytical testing lab and automated visual inspection system. Bringing the Vizag, India, plant online will have a bigger effect on Hospira's overall production capacity. Hospira has invested more than $200 million in the new plant--and could spend a further $250 million--to ensure it avoids the quality pitfalls encountered by Rocky Mount and some other U.S. facilities. Hospira expects Vizag to manufacture sellable products by the end of next year. 

- view the results
- here's Chicago Tribune's take
- here's the call transcript