Shares of Lake Forest-based Hospira Inc. fell nearly 7 percent Wednesday after the company said the Food and Drug Administration raised questions about the quality of its medical devices.
Battered by a string of product recalls and manufacturing issues, the maker of injectable drugs and infusion equipment warned that it could incur "significant" costs in restructuring and modernizing its device business.
Hospira Chief Executive F. Michael Ball told analysts in a conference call that the move to overhaul its device manufacturing division stemmed from a recently completed regulator inspection conducted in Lake Forest that "was particularly rough."
The FDA issued a list of 10 so-called "observations," or operational concerns, two weeks ago after an inspection of Hospira's medical device quality systems, which includes electronic infusion devices. Several of the concerns had been raised during an inspection last summer, Ball said. While the agency acknowledged the company's progress on some issues, it strongly encouraged the company to make further improvements.
"I'm disappointed at the outcome," Ball said. "What it indicates is that we've got a lot of work to do there."
Hospira said it notified customers that some of its drug infusion pumps either had to be adjusted or recalled. The company did not say which products were involved nor the scope of the recall.
Meanwhile, the company said it has spent nearly $375 million so far fixing widespread problems at its giant Rocky Mount, N.C., manufacturing plant, which makes injectable drugs, including solutions used for anesthesia and kidney and cardiovascular treatments.
The Rocky Mount plant has been under FDA scrutiny for three years for what the agency has called subpar manufacturing processes.
FDA inspectors recently returned to the plant, the company's largest, for another round of inspections that should be complete within weeks, Ball said.
"I'm excited they're actually there," he said. "It's like studying for a test for a year and a half and being happy on the day that it arrives."
The longstanding problems at Rocky Mount and other Hospira manufacturing sites has been a drag on earnings and the company's stock price, which is down more than 35 percent from July 2011, when the extent of those problems came into sharper focus.
Shares ended down $2.30, or 6.58 percent, at $32.65.
Hospira also said Wednesday it swung to a fourth quarter profit of $5.3 million, or 3 cents a share, compared to a loss of $214 million, or $1.30 a share, in the same period a year ago.
Sales were $1.1 billion, up 8.3 percent over last year.
Adjusted for certain items, the company said it earned $91.4 million, or 55 cents a share, up from $85 million, or 51 cents in the fourth quarter of 2011. Analysts expected 54 cents a share on revenue of $1.04 billion.
Higher sales were driven in part by an increase in its specialty injectable pharmaceutical products, including the sedative Precedex.
Hospira said it expects net sales growth in 2013 to be between 1 and 3 percent, with adjusted earnings per share of $2.05 and $2.20, short of analysts' average of $2.31.
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