Sterile injectable manufacturer Hospira recently received a warning letter from the Food and Drug Administration(FDA) over concerns at its plant in Italy. The concerns are many and some are quite serious. Given that Pfizer has made a $15 billion bid to take the company over, the letter couldn’t have come a worse time for Hospira.
The Warning Letter
The letter contains a stern warning about the manufacturing facility in Liscate, Italy. To begin with, the FDA has determined that Hospira did not properly investigate more than 100 complaints about discoloration of a single product. While the company did investigate the complaints, its investigation was very cursory and shortsighted. The manufacturer never came to the conclusion that the discoloration was actually caused by faulty manufacturing practices.
Additionally, the letter cites manufacturing issues that could allow microbial contamination on one aseptic filling line. Perhaps most damaging of all, the FDA found evidence that Hospira employees deleted or overwrote test results, a possible indication that employees were aware of the issues and were attempting to cover them up.
While the letter concerning the Italian plant is recent, Hospira has multiple plants in the U.S. and around the world that have failed FDA inspections. The FDA has posted warning letters concerning Hospira plants in Europe, Asia, and Australia. The company is building a new plant in India, but the FDA has already refused to allow manufacturing to begin amid a bevy of concerns with the equipment and the plant itself. The Indian plant, located in Visakhapatnam, is intended to greatly reduce operating costs for Hospira, so it is a key component of Hospira’s future.
An email statement from Hospira reads: ”Hospira is evaluating what corrective actions may be required to address the specific matters raised in the warning letter. It is important to note that we have already completed several of the corrective actions we committed to the agency in response to the May 2014 inspection observations, and the other actions are underway.” The company has spent hundreds of millions of dollars to upgrade equipment and missed out on hundreds of millions more due to lost sales during manufacturing interruptions.
Pfizer Takeover Bid
Pfizer is well aware of the warning letters and Hospira’s history with the FDA. The latest letter and the issues with the India plant are matters of public record, so did not stop Pfizer from offering $15 billion in cash and stock. In fact, Pfizer’s Executive VP of Global Supply Tony Maddaluna visited the plant before signing off on the takeover bid. He reported to investors that the visit convinced him that Hospira was on the right track, so it does not appear that the issues with the FDA will affect the takeover in the least. The acquisition will place Pfizer in a better position within the biosimilars market, giving the company a potential sales income that will offset any upgrades and changes that it must made at any of the Hospira plants.