[1/2]FILE PHOTO – The logo of Dutch technology company Philips is seen at the company’s headquarters in Amsterdam, Netherlands, on January 29, 2019. Portal/Eva Plevier/File Photo Acquire License Rights
- FDA questions Philip’s assessment of patient risk
- Philips agrees to additional testing
- Shares fall more than 9% in morning trading
AMSTERDAM, Oct 6 (Portal) – The U.S. Food and Drug Administration (FDA) said it was still not satisfied with the way Dutch health technology company Philips (PHG.AS) handled a major product recall, and the company should conduct additional risk testing.
Its shares fell 9.6% to 16.81 euros at 0726 GMT on Friday.
It was the latest setback for Philips in the wake of the recall of millions of sleep apnea and ventilators that has been ongoing since 2021.
“We do not believe that the testing and analyzes that Philips has published to date are sufficient to fully assess the risks that the recalled devices pose to users,” the FDA said in an update released overnight.
In response, Philips said it was testing the recalled devices at five independent laboratories, but agreed to the FDA’s request for more and was in discussions with the agency about details.
“Philips’ first priority is the health and well-being of patients, both in terms of providing replacement devices and testing to provide greater clarity on the safety of the sleep and ventilator devices covered by the recall,” it said it.
CEO Roy Jakobs has made the removal his top priority since he was appointed in October 2022 after his predecessor resigned.
The recalled devices used a type of foam that could degrade upon contact with cleaning chemicals and cause respiratory injury or cancer, the FDA said. There were 100,000 complaint reports about the machines and 385 deaths.
Philips lost more than two-thirds of its market valuation in 2021-2022 due to the recall, but saw a slight recovery in 2023.
“This is negative news,” said analysts at Bernstein, who have a price target of 20 euros and a “market perform” rating for the shares. “The FDA is clearly still not satisfied with the way the recall is being handled.”
In its update, the FDA emphasized that it remains “dissatisfied with the status of this recall” and added a new resource section to its website that includes patient feedback and a comprehensive timeline.
It noted that in March 2022 it had directed Philips to better communicate with the public, including issuing monthly updates, and in May 2022 it proposed to issue a repair/replacement/refund order to Philips, “an authority that does not was used…”10 years.”
Last month, Philips settled a key class of legal claims related to the recall, for which the company had previously set aside a 575 million euros ($606 million) provision.
However, the company continues to face personal injury lawsuits and an investigation by the U.S. Department of Justice. It is in discussions with the FDA about a consent decree or agreement.
($1 = 0.9485 euros)
Reporting by Toby Sterling and Piotr Lipinski; Edited by Jan Harvey and Elaine Hardcastle
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