Hospira says temporary production glitch affecting propofol supplies

A problem in manufacturing led Hospira ($HSP) to shut down production in its Clayton, NC, plant in March, and while the lines are back up, the result is a disruption of supplies of the sedative propofol.

The shutdown was disclosed by CEO Michael Ball during Hospira's investor call Tuesday. Production has resumed but Ball said it "has created a temporary shortage situation with propofol and also impacted certain contract manufacturing customers." A staged release of quarantined product will happen in coming weeks.

In fact, a significant portion of the call Tuesday focused on Hospira's upgrades and remediation efforts. The company beat analysts earnings predictions for its first quarter but saw a significant fall in earnings, much of it tied the costs of hiring consultants and making plant improvements for three plants cited in an FDA warning letter.

The company has been working through manufacturing issues raised by the FDA at plants in Austin, TX, and Clayton and Rocky Mount, NC. The Rocky Mount plant closed in December for maintenance then resumed production in January after the company threw extensive resources at fixing the problems. The plant is currently operating at 60% to 70% production and will remain there at least through mid-year. Remediation work is ongoing as the company continues to follow FDA suggestions, Ball said.

Hospira has beefed up its workforce at the plant, adding 100 of its own new employees in addition to the 150 consultants it has on the floor working with Hospira employees. The consultants are expected to remain most of the year, he said.

In Austin, Ball said the consulting firm, Lachman, has completed its work, and Hospira believes FDA concerns there have all been addressed. He said the company recently received an "untitled letter" about the work at all of the plants and that with additional time and investment will resolve all FDA concerns.

- get the earnings call transcript