Hospira faces $35m charge over Morgan Hill plans

By Gareth Macdonald

- Last updated on GMT

Related tags: Chondroitin sulfate, Revenue

The decision to end manufacturing operations at its facility in
Morgan Hill, California in the next three years may cost
Hospira up to $35m (€22.7m), according to a document the firm filed
with the US Securities and Exchange Commission (SEC).

Hospira said that running costs at the plant, which currently employs around 600 people, have become prohibitively expensive. The specialty pharmaceutical firm plans to transfer the majority of its Morgan Hill operations to other facilities and third party companies, but will maintain a 100-strong team at the facility. Tareta Adams, Hospira's director of public affairs, told in-PharmaTechnologist.com that the company is "to move the Plum XLD infusion pump manufacturing line to existing space in another Hospira facility​," but added that "the specifics regarding the subsequent phases of the transfer of manufacturing are not yet finalized​." She went on to say that "the 100 positions that will likely remain in Morgan Hill will be responsible for limited manufacturing, the repair business and key functions, such as materials logistics, engineering, on-market product support and customer service​." In recent years, Hospira has been reducing manufacturing capacity in an effort to improve efficiency. In 2005 for example, the firm shut down its facility in Donegal, Ireland, moving production operations to plants in Costa Rica and the Dominican Republic, while in 2007 it closed a production site in Ashland, Ohio. Hospira has also sold off its manufacturing facility in Montreal, Canada and is to phase out production at its plant in North Chicago, Illinois, by 2010. First quarter income beats forecasts ​ For the first quarter 2008, Hospira reported adjusted operating income of $145m (€94.3m) down 3.5 per cent on that reported last year. The Illinois-based firm said that the drop, which excluded charges related to its 2006 acquisition of Mayne Pharma, was due to costs associated with stock compensation, higher selling, general and administrative expenses and an increase in R&D spending. On a more positive note, adjusted income for the period, which was down 6.4 per cent on last year to $88m (€57m) or 55 cents per share, was ahead of the 54 cent per share consensus forecast of analysts surveyed by Thompson Financial. Quarterly revenue reached $888m, up 13.5 per cent on and adjusted basis. Hospira attributed much of the growth to the performance of its specialty injectables business, which saw sales increase some 60 per cent to $78m. Hospira predicted that net sales growth for the full year 2008 will be in the 6 to 8 per cent range, with adjusted earnings per​ share of between $2.45 and $2.55. Hospira's heparin contamination free ​ In other news, Hospira's heparinised saline product is one of several named as being free of oversulphated chondroitin sulphate (OSCS) by Australia's Therapeutic Goods Administration (TGA). The TGA's analysis was prompted by the emerging global contamination problem that was sparked by the discovery of OSCS in heparin made by US firm Baxter. The Australian agency's work did identify OSCS in a heparinised saline product made by the UK's AstraZeneca's.

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