DRAXIS Extends Scheduled Shutdown for Contract Manufacturing Division

30-Aug-2005

DRAXIS Health Inc. has extended the period before it will resume production of sterile and lyophilized products at DRAXIS Pharma, its pharmaceutical contract manufacturing division, as part of its regular summer shutdown for maintenance. This extended shutdown does not affect in any way its production of non-sterile products or radiopharmaceutical products sold by the DRAXIMAGE division.

The shutdown period for the sterile and lyophilized product areas was initially scheduled to run for two to three weeks, but due to additional requirements that came to light near the end of the initial shutdown period, it is now expected that the shutdown will be five to seven weeks in total.

The delay in resuming production in these two product areas will result in some production planned for 2005 being pushed into early 2006. The impact of this change on revenues and earnings for 2005 will depend on when production of sterile and lyophilized products can be resumed, at which time a further news release will be issued updating earnings guidance for 2005. Revenues in the first half of 2005 from sales of sterile and lyophilized products, which are the only products affected, averaged US$100,000 - US$150,000 per day. All efforts are being taken to mitigate the impact on DRAXIS customers and earnings.

Resumption of production for sterile and lyophilized products following the shutdown was impacted by the need to replace a major electrical panel and a pump assembly. The DRAXIS quality control department has now determined that further cleaning and decontamination of the sterile production area is required. This procedure will be followed by the usual validation testing to ensure full compliance with cGMP requirements.

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