Hospira's new India plant again faulted by the FDA

The opening of Hospira's new plant in India that it is counting on to lower its manufacturing costs will be delayed again after it racked up another set of observations during a reinspection by the FDA last month. Unless quickly resolved, it will be an issue that Pfizer ($PFE) will inherit given its $15 billion buyout of Hospira announced last month.

The Lake Forest, IL-based Hospira ($HSP) said in an SEC filing that the FDA gave the Vizag plant a Form 483 with 14 observations following a 10-day inspection that was concluded on Feb. 25. The drugmaker did not provide any specifics about the observations but said it "intends to respond fully and in a timely manner."

F. Michael Ball

The FDA did its initial preapproval inspection at Vizag in March of last year and at that time presented the facility with a Form 483 with 10 observations. Hospira then received an untitled letter focused on two corrective actions. CEO F. Michael Ball had told analysts several times that he hoped the facility could satisfy the FDA concerns and open by the end of last year as was initially planned.

Hospira has been building the 1.1-million-square-foot manufacturing plant in Visakhapatnam, India for several years. It will add about 500 million additional units of sterile injectable drugs to Hospira's supply chain annually, which Ball has said should significantly reduce its overall cost of products.

The drugmaker initially intended to spend about $200 million on the facility but that grew to $450 million after the company decided to install visual inspection equipment that Ball said would help it avoid the quality pitfalls encountered by its troubled Rocky Mount, NC, plant. The drugmaker has also opened a training facility in Vizag to make sure its new Indian employees are fully prepared.

The plant is one of three that Pfizer officials scoped out before making its bid for Hospira. Tony Maddaluna, Pfizer's executive VP of global supply, told investors when the deal was announced that Pfizer was satisfied with Hospira's efforts to get on top of issues raised by the FDA at plants in the U.S., India and more recently in Australia.

But the problems at Vizag are not the only ones the drugmaker is dealing with in India. A warning letter was issued to its facility in Irungattukottai in May 2013 and then received another 23 observations in a follow-up inspection later that year.

- here's the SEC filing