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Executive Summary

BOLAR TEMPORARILY SHUTS DOWN MANUFACTURING/SHIPPING OPERATIONS due to the ongoing audit of 64 of the firm's generic drugs. Bolar announced March 2 that it was "temporarily closing substantially all of its manufacturing, packaging and shipping operations and laying off related employees." The firm has reached an agreement with FDA on the general procedures that will be used in the audit; however, Bolar said it is not possible "at this time to forecast the duration of the marketing suspensions." The company is laying off "51 of the 93 employees in its facility in Puerto Rico, and 66 of the 243 employees in its Copiague, New York facility." The Copiague employees not affected by the layoffs include those in R&D, quality assurance, administration and maintenance. "Those employees will continue work on the ongoing audits and on other matters intended to permit the company to resume manufacture and shipment of its products." * The announcement comes one month after Bolar suspended distribution of its entire product line after agreeing to an FDA audit of drugs with narrow therapeutic ranges. FDA was concerned that data submitted in those ANDAs may have been false. The agreement extended the audit to cover other drugs; following the evaluation, Bolar recalled 13 products because they were not manufactured in accordance with FDA approvals ("The Pink Sheet" Feb. 19, p. 12). Three of the company's top selling drugs had been recalled prior to that. On Feb. 9, FDA agreed to let Bolar resume shipments of seven drugs. Apparently, the majority of those drugs are manufactured by other companies. However, KV Pharmaceutical has sued Bolar in order to retrieve rights to two of the drugs, potassium chloride and disopyramide phosphate ("The Pink Sheet" March 5, T&G-13). Bolar markets and distributes the drugs under a joint venture agreement. In a similar action, Quantum Pharmics permanently stopped its drug production and shipping operations, in December, as a result of an agreement with FDA in November to withdraw 25 ANDA applications affecting 21 of the firm's 22 products ("The Pink Sheet" Jan. 8, T&G-5). Earlier, Quantum had temporarily halted drug production to facilitate FDA's inspection and an internal audit of the manufacturing plant. Bolar announced in a March 5 release that it had agreed to settle the Securities and Exchange Commission's outstanding complaint against the firm and former President Robert Shulman filed Feb. 16 in Washington, D.C. federal court. The complaint alleges that the company made "false and misleading disclosures" and failed "to disclose material [adverse] information about Bolar to the public." The SEC filing points out that although Bolar agreed on Feb. 2 to suspend distribution of its product line pending the audit, the commission was not notified and public trading of Bolar stock was not halted until Feb. 7. SEC asked the court to enjoin Bolar and Shulman from future violations of SEC regulations. "Without admitting or denying the allegations of the SEC's complaint, Bolar consent to the entry of an injunction barring it from future violation of the antifraud provisions of the Securities Exchange Act," the release says. On March 5, Bolar announced the resignations of Shulman and former Exec VP Jack Rivers from the board of directors. The two stepped down from their executive positions after the firm's Feb. 11 board meeting. The board selected Chief Financial Officer Lawrence Raisfeld as Bolar's new president. Raisfeld is also a board member. Newly-appointed Exec VP Jack Kornreich was recently added to the board of directors. According to the company's May 1989 proxy, there are two outside directors -- Herman Antonoff, president and chairman of the board of Medical Transportation Corp., and Michael Fedida, an officer and director of severe retail pharmacies. On March 3, the company announced plans to repurchase "up to 2 mil. shares of its common stock in the open market from time to time."

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