February 6, 2018 / 11:46 AM / 5 months ago

AmerisourceBergen gets U.S. subpoena regarding Memphis plant

(Reuters) - AmerisourceBergen Corp (ABC.N) on Tuesday said it received a grand jury subpoena from U.S. prosecutors seeking documents related to laboratory testing procedures at a facility that produces around half of the compounded drugs it supplies.

The U.S. drug distributor also said it expected to take a $60 million hit to its core profit in 2018 after it suspended operations at the automated facility in Memphis in December following inspections by the U.S. Food and Drug Administration.

AmerisourceBergen said the grand jury subpoena it received in November from the U.S. Attorney’s Office for the Western District of Tennessee sought records regarding products packaged in a certain type of syringe at the Memphis facility.

The Memphis plant, which makes medicines in doses that are not commercially available, was acquired as part of AmerisourceBergen’s 2015 buy of PharMEDium Healthcare Holdings.

In January, the PharMEDium unit announced that it was expanding a recall that it began in December of certain drugs produced at the Memphis facility due to a lack of sterility assurance.

AmerisourceBergen reported that its top-earning drug distribution services unit – which connects drugmakers with hospitals and pharmacies – earned $38.94 billion in the first quarter.

But trouble with the Memphis facility, which the company said will resume operations this quarter, dragged sales below the $39.29 billion estimated on average by three analysts polled by Thomson Reuters I/B/E/S.

Investors who previously overlooked the importance of this facility for AmerisourceBergen are now concerned about how it will get the plant up and running, a Deutsche Bank analyst said.

AmerisourceBergen’s first-quarter profit beat expectations as a fall in generic drug prices steadied after a volatile 2017.

“In the first quarter of the fiscal year, we saw further market, pricing and competitive stability,” AmerisourceBergen Chief Executive Steven Collis said.

AmerisourceBergen posted a quarterly profit that more than tripled to $861.9 million, or $3.90 per share, helped by a $587.6 million tax benefit.

AmerisourceBergen said it would focus on differentiated pricing of biosimilar drugs to offset lower contribution from generics.

It raised its adjusted earnings per share forecast for fiscal 2018 to between $6.45 and $6.65 from $5.90 to $6.15.

Despite warning of lower contribution from PharMEDium, AmerisourceBergen raised its profit forecast on account of expected benefits from favorable U.S. tax laws.

Excluding items, AmerisourceBergen earned $1.55 per share in the quarter ended Dec. 31. Revenue rose 6 percent to $40.47 billion.

Reporting by Tamara Mathias and Anuron Kumar Mitra in Bengaluru; Additional reporting by Nate Raymond in Boston; Editing by Arun Koyyur and Lisa Shumaker

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