Pfizer 'comfortable' with Hospira's manufacturing network after quality review

09-Feb-2015 - Last updated on 09-Feb-2015 at 16:07 GMT

Pfizer visited three troubled manufacturing sites in its assessment of $17bn m&A target Hospira

Pfizer visited three troubled facilities in Hospira’s manufacturing network before entering a $17bn definitive merger agreement, the company says.

Last week, Hospira initiated a voluntary recall of 126,075 vials of the short-acting amnestic drug propofol - made at the Clayton, North Carolina facility which has been earmarked for closure – after the firm was alerted to an embedded particulate in the neck of a vial.

The news was the latest in a very long line of quality issues for Hospira. Since 2012 the firm has recalled over 40 drugs and medical devices, while its manufacturing network has been subjected to a number of US Food and Drug Administration (FDA) warning letters.

The firm has stressed it is committed to resolving these quality issues and Big Pharma firm Pfizer, which announced it was buying Hospira for $17bn (€15bn) on the same day as the propofol recall, says it is “comfortable” with the remediation efforts being undertaken.

“We performed a review of Hospira’s manufacturing network, held several conversations with Hospira’s operations and quality leadership, and visited three key manufacturing sites,” John Young, Group President of Pfizer’s Global Established Pharma Business said in a press call last week.

“As a result of the review we feel comfortable that issues raised by regulators either have been, or are being properly and adequately addressed and feel comfortable with the transaction based on that review.”

The plants visited included Rocky Mount, North Carolina, which has seen over $200m pumped into it since being hit with a warning in 2010, and a device facility in Costa Rica which is under a warning from 2012 but had a US import alert lifted early last month.

The third plant inspected by Pfizer was the 1.1m sq ft sterile injectables facility in Vizag, India. Vizag received a 483 with ten observations following an inspection last year, and is yet to have commenced operations.

“[Vizag] is currently going through FDA approval,” said Young. “It’s in the process of that and regardless of the outcome of the inspection and timing it does not affect the value of the transaction.”

Generics Unit Spin-off?

Pfizer currently has 73 branded products available across multiple therapeutic areas, and the addition of Hospira will greatly expand this, and, according to Adam Dion, an analyst for GlobalData, will be seamlessly integrated into Pfizer’s Global Established Pharmaceutical (GEP) segment.

But following the integration, Dion believes the segment could be sold off:

“The Hospira deal will add significant value to Pfizer’s GEP segment, a vertical which has been rumoured to be sold or spun-off as a separate entity. This somewhat mirrors Pfizer’s strategic objective to focus on core growth platforms in the branded drug market while divesting its ancillary operations, similar to when it carved-out its Animal Health business (Zoetis) and brought it public.”

He added: “Given Pfizer’s desire to retain its pharma leadership and move into biosimilars, it may decide against a split in favor of maintaining a level of operational independence between its innovative and mature portfolios.”