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DURAMED WILL AUDIT ENTIRE PRODUCT LINE FOLLOWING SUSPENSION OF PRODUCT SHIPMENTS; FIRM TAKES $2.65 MIL. CHARGE AGAINST EARNINGS  IN THIRD QUARTER

Executive Summary

Duramed has suspended shipments of its entire product line while it conducts an in-house audit focusing on manufacturing processes, the generic firm announced in its third quarter sales and earnings report on Nov. 20. Duramed Chairman and CEO Thomas Arington described the company's move as a "good faith measure" to "ensure that no historical issues impact on the company's future." The firm halted sales Nov. 16; the decision affects the two-thirds of Duramed's generic drugs product line that remained on the market following the recent extension of the company's December 1989 recall of conjugated estrogens ("The Pink Sheet" Oct. 29, T&G-11). The audit process is expected to last four to six weeks. The in-house audit is focusing on any changes that may have been made in the manufacturing processes of 26 products since the submission of ANDAs to the agency. "Many of these issues center on changes in manufacturing which, at the time they were made, were deemed not to require FDA approval prior to implementation," Duramed explained. The audit is being conducted internally, by employees from a variety of disciplines within the company's ranks. Duramed said that an outside consultant will review the results of the audit. Duramed also reiterated its intention to discontinue marketing of its conjugated estrogens product line ("The Pink Sheet" Oct. 29, T&G-11). Duramed said Nov. 20 that the decision resulted from the financial impact of the ongoing recall combined with FDA's continuing goal of withdrawing approval for all generic conjugated estrogens products. As a result of the expanded recall effort, Duramed said operating results for the third quarter include a $2.15 mil. charge shown as a "reduction in net sales for credits expected to be issued to customers for returns." Additionally, Duramed is taking a $500,000 charge to earnings to write off existing inventories of conjugated estrogens. With the impact of the charges to earnings, Duramed reported losses for both the quarter and the year-to-date period, of $2.9 mil. and $4.5 mil., respectively. Sales through the first nine months are down 7.7% ($1.7 mil.) to $20.8 mil. Quarterly sales, however, rose 9.6% to $7.2 mil. Chart omitted.
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