Mylan says plant remediation dictated in part by which generics to drop

Mylan started a comprehensive remediation of its massive Morgantown, West Virginia, plant in June after the FDA criticized management for weak oversight that led to a myriad of problems at the massive facility. The generics maker said on Wednesday that the remake and upgrade, which will take the rest of the year to complete, will result in a plant that is not only improved but also "simpler" to operate.

The remediation follows a three-week inspection of Mylan's key U.S. plant last spring. It was then hit with a 32-page Form 483, criticizing it for poor oversight by its quality-control department, major lapses in equipment cleaning, ineffective laboratory controls and sampling and more.  

Even before the FDA lit a fire under the seat of Mylan executives with its Form 483, they recognized that the Morgantown site needed to be less complex, Mylan President Rajiv Malik told analysts on Wednesday, according to a Seeking Alpha transcript of the company’s second-quarter earnings call.

"It was a part of our—this year's plan actually to right-size it," Malik explained, "because we have observed that it will be very difficult for us to manage this sort of complexity, which Morgantown is," with its 20 billion doses in a rapidly changing generics market and "evolving FDA expectation."

A big part of the plan was to decide which products to stop making as pricing pressures in the U.S., a market that now accounts for only 40% of its sales, sucked out their profits. He said they have "packed" up products where there are "six, seven, eight, 10 competitors," keeping those that are profitable while also making sure it doesn’t drop products where there would be a chance of drug shortages.  

Fewer products means fewer workers. The company announced in April that it would lay off 500 workers, leaving about 3,000 at the site, as part of a "right-sizing." The company said it's "committed" to maintaining its U.S. manufacturing footprint and plans to "continue making the majority of the medicines we supply to the U.S in the U.S."

But besides the plant downsizing, the company is still having to address lots of shortcomings that the FDA laid out in two Form 483s in two years. The facility had been nicked in 2016 with a 23-page citation with five observations, some of them similar to those listed in the April report. Mylan has already accounted for $87 million in expenses tied to the plant upgrades. 

Malik, however, did have some more positive manufacturing news to report. The FDA has cleared a plant in Nashik, India, that was slapped with a warning letter last year.

"As for Nashik, I'm happy to inform you that our warning letter has been lifted, and we are operating business as usual," he said.

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