Mylan Shares Drop on Report of Plant Probe

MORGANTOWN, W.VA. (TheStreet) -- Investors discarded shares of generic drug-maker Mylan (MYL) after an investigation of its quality-control procedures turned up "pervasive" malpractice at a Mylan drug plant in West Virginia.

The Pittsburgh Post-Gazette broke news of Mylan's internal probe, running a story in its Sunday edition.

Mylan's investigation discovered that workers at the plant had ignored government quality-control red flags. But, the Gazette said, the company hadn't released any of this information to the public.

The plant, in Morgantown, W. Va., makes a wide range of medicine for diabetes, depression and cancer among other diseases and disorders, producing some 19 billion doses a year.

The Gazette quoted from Mylan's internal report. The company evidently used the words "very serious" to describe the violations, which entailed both "falsifying information" and "altering product."

On Sunday, Mylan issued a statement that essentially argued against the Gazette's report on technical grounds, saying that the story was based on "improperly obtained documents" and "anonymous sources." It also criticized several experts quoted in the article, calling them "uninformed."

"Simply put, our investigation of the issue demonstrates that our quality systems are working, not the contrary," Mylan continued in its statement. "Our customers and stakeholders can rest assured that whenever there is even the slightest departure from an SOP, it will be dealt with immediately and effectively. This issue had no impact on the quality of our product."

In midday trading Monday, Mylan shares were down 12%, or $1.69, to $12.16, on volume of 29.8 million shares. The average daily turnover of the stock is 7.7 million.

Reported by Scott Eden in New York.

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