Leiner moves forward in its re-entry of the OTC market

CARSON, Calif. Leiner Health Products Tuesday morning stated in a conference call with analysts that the company is continuing to move forward in re-entering the over-the-counter market following the voluntary closure of its Fort Mills, S.C. OTC manufacturing facilities following a failed Food and Drug Administration inspection of its facilities.

Leiner reported that retailers have been supportive of the company’s return to the OTC sector, especially given the fact that Perrigo is currently the only OTC store brand manufacturer in the market. Dr. Reddy, which had previously sourced its OTC offerings from Leiner, "to our knowledge has yet to ship any product" since the deal between Dr. Reddy and Leiner had been terminated in April, Bob Kaminski, Leiner chief executive officer said.

Prior to Leiner’s voluntary suspension of OTC products, the company marketed more than 80 different OTC products with approximately 915 different SKUs.

"Our goal is to emerge from the challenges we faced here to be a best-in-class supplier," Kaminski said. Toward that end, Leiner has restructured its quality assurance team, naming John Johnson to the lead post in, and hopes to have OTC manufacturing capability back in place within six months. "As part of our efforts in this area, we recently recruited John Johnson to join Leiner’s team as senior vice president, quality and compliance," Kaminski stated. "John, who was most recently the senior quality executive for Mayne Pharma, has more than 30 years’ experience and a demonstrated track record in successfully driving quality initiatives."

Leiner begins meeting with the FDA Aug. 15 regarding reinstituting its OTC production facilities. Kaminski noted that Leiner is on schedule with its plans to get back into the OTC market, but would not move forward until Johnson and his team are comfortable, and the FDA has granted approval.

Following FDA approval, Leiner will begin negotiating with retailers on a ramp-up program for its OTC business. Kaminski explained that the company’s product mix will be different from before, and that retailers are expected to cede Leiner back into the mix on a dual source basis, meaning that on a short term basis Leiner will not realize the volume of business it had before the Fort Mills plant closure (where it had been a single-source suppliers on certain SKUs for some retailers) and in the long-term may gain business by becoming the secondary source of product in categories in which it had not participated before.

For the first quarter ending June 30, Leiner recorded net sales of $107.4 million, a decrease of 34.4 percent compared to year-ago. Leiner reported a net loss of $27.5 million, compared to a net gain of $2 million in the year-ago quarter.