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Executive Summary

LANNETT AUDITING ALL ANDAs AND OVERHAULING GENERIC DRUG FACILITY in the wake of a management change for the 52-year-old Philadelphia drug firm. Lannett Company President and Chief Operating Officer Barry Weisberg announced the shutdown and ANDA audit on Sept. 19; Lannett actually suspended manufacturing and distribution and began the audit on Aug. 16. The firm is conducting its own audit of Lannett's estimated 60-70 approved ANDAs. Lannett has no pending ANDAs at FDA, Weisberg said. Control of Lannett, which is publicly traded on a limited basis, changed hands recently when investor William Farber acquired a majority stake in the company, became chairman of the board, offered new financial backing and initiated an executive changeover. Weisberg, who came on board as president and chief financial officer in the reorganization, succeeded former Chairman and President Samuel Gratz and VP Corporate Development Gerald Levinson. Weisberg is a former division VP at Moore Medical and previously was with Zenith Labs (until 1981) and Bolar (until 1984) in sales and marketing positions. Lannett's internal audit, which is being reviewed by the outside firm of Bennett & Company (Columbia, Md.), includes an examination of, among other things, stability and validations systems at the Pine Street plant. The modernization will take place in stages and includes plans to improve manufacturing, inventory and quality control capabilities. The "initial" work is expected to take "not less than 60-90 days," and operations then are expected to resume on a "limited product" basis in the first section of the revamped facility, Lannett said. As part of the audit, Lannett will decide which of its marketed products are viable from an economic and marketing standpoint. Lannett's catalog includes a number of old-line products for which production may not resume, Weisberg noted. Lannett is also assessing soil and groundwater contamination at the plant, which has been the subject of a Philadelphia fire marshal citation and an ongoing law suit against the firm. The company noted that the reports are being assessed "to determine to what extent remedial actions, if any, are required," and that the proper government agencies have been apprised of the situation and will coordinate any remedial actions taken with the firm.

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