Hospira to Close Clayton, North Carolina Manufacturing Facility

Hospira, Inc. has approved and announced a plan for the closure of its manufacturing facility in Clayton, North Carolina in the second half of 2015. The closure will include the discontinuation or transfer of the products manufactured at the site to other Hospira locations or third parties.

“This action results from extensive analysis of the plant, careful assessment of market needs for the products manufactured there, and available capacity within our operations network, and is part of the company's ongoing optimization and modernization efforts.” said the company in a US Securities and Exchange Commission filing announcing the closure.

Hospira estimates that this activity will result in total pre-tax charges of approximately $45 million. This includes a non-cash charge for the impairment of assets of approximately $22 million recognized in the fourth quarter of 2014, which is based on Hospira's analysis of expected future production volume at the Clayton facility. The remaining charges are expected to be recognized through 2015 and are estimated to include approximately $15 million for cash employee-related costs, including costs for severance, retention, and other employee related assistance and other exit costs associated with the plan, and approximately $8 million in other non-cash costs, including accelerated depreciation of plant assets. The cash related charges do not include capital expenditures or product transfer costs related to establishing manufacturing operations in any other locations or offset by any potential proceeds from the sale of the existing facility and related assets.

In April 2010, Hospira received a Warning Letter from the US Food and Drug Administration FDA in connection with the FDA’s inspections of Hospira’s pharmaceutical and device manufacturing facilities located in Clayton, North Carolina, and Rocky Mount, North Carolina. In the 2010 Warning Letter, the FDA cited current good manufacturing practice deficiencies related to particulate in certain emulsion products at the Clayton facility and the failure to adequately validate the processes used to manufacture products at the Rocky Mount facility. The 2010 Warning Letter also asserted other inadequacies, including procedures related to the quality control unit, investigations, and medical reporting obligations. Since issuing the 2010 Warning Letter, the FDA has completed multiple follow-up inspections at both the Clayton and Rocky Mount facilities. In June 2013, after the latest FDA inspection at the Clayton facility, the facility was designated as “no action indicated” (NAI). An NAI inspection classification occurs when no objectionable conditions or practices were found during the inspection or the significance of the documented objectionable conditions found does not justify further actions.

Source: Hospira

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