- The Food and Drug Administration is concerned that generics giant Mylan has deep-rooted problems in its global manufacturing network, with the latest evidence coming from a site in India.
- The agency posted this week a warning letter about Mylan's Unit 7 facility, which makes dozens of active pharmaceutical ingredients, or APIs, used in blood pressure drugs, antifungals and central nervous system treatments. During a February inspection, regulators found the site did not have adequate procedures in place to prevent contamination. They noted that similar issues were seen last year at Unit 8, another Mylan plant located in India.
- "These repeated failures at multiple sites manufacturing API demonstrate that your company's oversight and control over the manufacture of drugs is inadequate. You should immediately and comprehensively assess your company’s global manufacturing operations," the FDA wrote in its warning letter for Unit 7.
Before legal troubles and a challenging generics market wiped out much of its value, Mylan was an industry titan with a glowing manufacturing record to match.
"There was a time, of course, that the very thought of Mylan receiving an FDA warning letter was unthinkable, as the company had the longest unblemished [Good Manufacturing Practice] track record in the industry," Elliot Wilbur, an analyst at Raymond James, wrote in a note to clients this week.
The record has been blemished in recent years, though. In 2018, the FDA warned Mylan about its manufacturing plant in Morgantown, West Virginia. Among the problems regulators saw were cleaning processes that didn't adequately protect from contamination risks, as well as ineffective investigations into the root cause of why some drug products didn't meet certain testing requirements.
Then, in 2019, regulators determined that Mylan's Unit 8 also didn't have proper procedures in place to keep raw materials pure as it received, tested and handled them. The FDA inspection came about six months after Mylan recalled batches of a blood pressure medicine called valsartan because of contamination from the carcinogen NDEA.
Mylan's latest warning letter, for Unit 7, also focuses on contamination risks. But its impact on Mylan isn't fully clear.
The company said in a statement it doesn't expect the letter to cause any manufacturing interruptions at the site, nor should it have any "significant commercial impact." Mylan also noted that it doesn't have any significant drug launches planned for Unit 7 in 2020.
Late Thursday, Mylan issued a second statement to correct "misleading information currently being circulated" about the warning letter. The drugmaker said it had proactively taken steps to address nitrosamine impurities before the inspection of Unit 7, including stopping the purchase of solvents from a supplier flagged by the FDA.
In his note, Wilbur described the warning letter "as unmenacing as they get," with the issues cited being "relatively benign" given the kind of feedback the agency can give.
Umer Raffat of Evercore ISI, however, found the letter to have "pretty intense wording."
The analyst dug into the types of drugs manufactured at Unit 7 and found at least 47, including those used in various statins, blood pressure medications, antifungals, antipsychotics and other neuroscience drugs.
"From a stock perspective, Mylan does need to tighten the controls on manufacturing sites," Raffat wrote in a note to investors.
"With that said, is there a clear impact to numbers? I doubt it," Raffat wrote, adding that investors remain focused on the closing of Mylan's merger with Pfizer's Upjohn unit.