The Detroit generic drug maker Caraco Pharmaceutical Laboratories Ltd. (NYSE Amex: CPD) said Monday it is laying off its 350 production employees "in order to align its expenses with the current voluntary cessation of its manufacturing operations in connection with the recent action by the United States Food and Drug Administration."
Caraco said the date for resuming manufacturing "in whole or in part, depends on the outcome of discussions with the FDA ... The company may recall some employees to assist us in any remedial action plan that is developed based on such discussions."
The FDA seized drugs and pharmaceutical ingredients June 25 made at Caraco's Detroit, Farmington Hills and Wixom locations. The FDA said the seizure was based on "the company's continued failure to meet the FDA's current Good Manufacturing Practice (cGMP) requirements." The FDA said that "FDA inspections of Caraco have documented serious violations of cGMP regulations. The most recent inspection which ended in May 2009 revealed serious deficiencies in the control of the company's manufacturing practices. Since January 2009, Caraco has recalled a number of products due to manufacturing defects, including oversized tablets."
Caraco also announced that it has been informed by JPMorgan Chase Bank, N.A. that its $10 million line of credit, of which there is a zero balance, is not available to be drawn down upon until the FDA matter is resolved. This does not have any material impact on the company's current financial position.
Manufactured product sales have represented about a third of Caraco's revenue. For fiscal 2009, net sales of manufactured products and of distributed products were $111.8 million and $225.4 million, respectively. Caraco said it "anticipate(s) working with the FDA for resolution as expeditiously and effectively as possible. We fully expect to emerge as a stronger company while providing quality products to our customers."
More at www.caraco.com.
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