Cantrell Drug Co. Bankruptcy Announced After FDA Suspends Drugmaker’s Production
Little Rock, Arkansas-based drugmaker Cantrell Drug Company has filed for Chapter 11 bankruptcy after the Food and Drug Administration (FDA) suspended the drugmaker’s right to manufacture and ship drugs. Cantrell Drug Co.’s bankruptcy brings to light its $7.46 million debt load, which the company promises not to write off during the ongoing proceedings.
Founded in 1952, the half-a-century-old, home-grown pharmaceutical company recently underwent two rounds of inspections by the FDA, which questioned its drug quality control. The FDA decided to suspend Cantrell’s production and shipment of drugs to hospitals until the administration’s concerns were addressed.
Twice in the past eight months, Cantrell had to halt production under FDA’s orders. The shutdown cut the drugmaker’s revenue stream, after which management ran out of money to continue day-to-day operations. Cantrell Drug Co.’s bankruptcy followed as the company faced a severe cash crunch.
Company chief Dr. James McCarley, who co-owns the private company with his wife, says he is currently paying for company expenses, including employee payroll, out of his own pockets.
Cantrell Drug Co. Bankruptcy Follows as FDA Pushes Pharma Industry into a Tug of War
The FDA’s suspension order has exacerbated troubles for the small drug company, which has been trying to compete with larger drugmakers in the industry. Cantrell Drug Company is a specialty pharmaceutical company that produces and sells injectable drugs to hospitals. It faces the same headwinds as do the bigger industry players.
Numerous pharmaceutical companies have recently been undergoing restructuring to better prepare themselves for growing competition in the American pharma industry. Many have blamed the FDA for allowing too many generic drugmakers to enter the market, making the environment increasingly competitive. Price wars within these drugmakers are beginning to undercut their profits and are forcing them to resort to cost-cutting measures.
A number of small and big pharmaceutical companies have turned to job cuts and capital expenditure cuts this year to curtail their expenses.
Although, Cantrell Drug’s CEO says he doesn’t directly blame the FDA, he has emphasized that the production shutdown will adversely affect his hospital customers.
Also, despite its ongoing financial woes, the Cantrell Drug Co. CEO says that Cantrell Drug Co.’s bankruptcy will not affect its creditors. The CEO aims to restructure the company and come out victorious through its bankruptcy phase. He reassured the lenders saying, “our intent is to pay one hundred cents on the dollar to all our creditors. We have no intention of any sort of liquidation, cram down or write off.”
“Cantrell Drug Company Announces Reorganization,” Business Wire, November 7, 2017.
“Cantrell Drug Co. Files Chapter 11 Bankruptcy,” Arkansas Business, November 7, 2017.