Warner Chilcott's Puerto Rico plant still beset by problems
Warner Chilcott ($WCRX) hopes to get manufacturing issues resolved for one oral contraceptive before generic competition on another starts eating away at its earnings.
Manufacturing issues persist at the specialty drugmaker's plant in Fajardo, Puerto Rico, which in March was cited in a warning letter by the FDA. The agency said testing failures had put into question the long-term effectiveness of 5 years worth of Ovcon 50 mg pills. CEO Roger Boissonneault says the company is focused on getting on top of FDA's concerns and getting production returned to normal.
In a call with analysts after its financial release Thursday, Gary Nechman of Susquehanna Financial tried to pin down a somewhat elusive Boissonneault as to whether things will be fixed before generic competition to Chilcott's Loestrin line kicks in. Sales are predicted to drop 15% over the three years ending 2014 as generic rivals flow into the market.
"You know, we have great confidence in Fajardo, number one, and we have great confidence that we are going to do everything necessary to put this warning letter behind us, and the whole organization is mobilized. So, that is strategy A," Boissonneault replied.
And if all of that takes longer than expected, Nechman wondered? "I mean, however it materializes, you still feel pretty confident that you'll have life cycle extension in place to protect the Loestrin 24 franchise?" he persisted.
Well, Boissonneault said, back-up plan B is that some of the company's other plants can produce hormones, so there is some flexibility. Executives did not put a price tag on either the fixes or on lost production and the company did not respond to a request from FiercePharmaManufacturing for an explanation. Financial filings did show that revenues for its "Other Oral Contraceptives" category dropped 40% in the quarter to $6 million from $10 million.
Of course the plant problems in Puerto Rico are only really just the tip of the iceberg faced by the Irish company. While it beat analyst predictions for the quarter, it lowered its earnings outlook for the rest of the year as generics trim sales of its acne drug Doryx. It also recently said it is studying "strategic alternatives"--code words that generally mean looking for a buyer.
- here's the Q&A transcript