) recently announced that the US Food and Drug Administration
(FDA) issued a warning letter to the company's generic arm,
Sandoz, regarding its Austrian manufacturing site, Unterach.
Novartis acquired the Unterach site in 2009 through the
acquisition of EBEWE Pharma. The warning letter was issued by the
FDA following an inspection of the site in Oct 2012.
We note that Novartis has faced manufacturing issues in many
of its other facilities in the past, resulting in the loss of
sales and market share.
In 2011, the FDA had issued a warning letter to three of
Sandoz's facilities located in Colorado, North Carolina and
Canada, raising concerns about these facilities' compliance with
the FDA's regulations on current Good Manufacturing Practices
We remind investors that one of the key objectives for
Novartis' management in 2012 was to strengthen quality
Novartis was required to expend considerable resources on the
remediation of these sites.
Although the Colorado facility achieved compliance in the
fourth quarter of 2012 following a satisfactory re-inspection by
the FDA, the other two sites continue to await compliance
In addition, Novartis' ophthalmology division, Alcon, received
a warning letter from the FDA in Dec 2012 following an inspection
of the company's laser manufacturing site in California.
The issue has yet to be resolved. We expect the company to
work on the timely resolution of the manufacturing issues with
the FDA as failure to do so will result in further disruption in
the supply of products thereby impacting sales and market
Novartis currently carries a Zacks Rank #3 (Hold). Right now,
Anika Therapeutics, Inc.
) look attractive with a Zacks Rank #1 (Strong Buy).
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