Inventories

3 Months Ended

Sep. 30, 2012

Inventories

Inventories

Note 4.  Inventories

Inventories at September 30, 2012 and June 30, 2012 consist of the following:

(In thousands)	September 30, 2012		June 30, 2012
Raw Materials	$	11,648	$	11,351
Work-in-process	6,336		4,805
Finished Goods	7,875		9,130
Packaging Supplies	1,747		1,778
	$	27,606	$	27,064

The preceding amounts are net of excess and obsolete inventory reserves of $1,564 and $1,472 at September 30, 2012 and June 30, 2012, respectively.

Recently, the FDA increased its efforts to force companies to file and seek FDA approval for GRASE or Grandfathered products.  GRASE products are those “old drugs that do not require prior approval from FDA in order to be marketed because they are generally recognized as safe and effective based on published scientific literature.”  Similarly, Grandfathered products are those which “entered the market before the passage of the 1906 Act, the 1938 Act or the 1962 amendments to the Act.”  Efforts have included issuing notices to discontinue marketing certain products to companies currently producing these products.  Lannett currently manufactures and markets several products that are considered GRASE or Grandfathered products, including C-Topical Solution and Oxycodone HCl Oral Solution.  The FDA is currently undertaking activities to force all companies who manufacture such products to file applications and seek approval for these types of products or remove them from the market.  The Company had approximately $942 and $1,703 of net inventory value of other Grandfathered products at September 30, 2012 and June 30, 2012, respectively.