Royal Philips NV suffered another setback as the US drug regulator requested additional tests on its sleep apnea devices, warning that the company’s analysis of the recalled products is inadequate.
(Bloomberg) — Royal Philips NV suffered another setback as the US drug regulator requested additional tests on its sleep apnea devices, warning that the company’s analysis of the recalled products is inadequate.
Further testing is required to “fully evaluate the risks” after initial results showed exposure to the devices is unlikely to cause considerable health damage to patients, the US Food and Drug Administration said in a statement on Thursday. The Dutch company’s shares fell as much as 10% in Amsterdam, the most in a year.
The maker of medical gear initiated a recall of the so-called BiPAP and CPAP machines in June 2021, with the FDA labeling it as a Class 1 issue, the most serious type. Philips already set aside about €1 billion ($1.1 billion) for the recall of some 5.5 million devices, and agreed to pay at least $479 million to resolve some of the litigation.
The developments make a sales ban in the US “all the more likely,” according to Bernstein analyst Lisa Bedell Clive. “The FDA are clearly still not happy with the way the recall is being handled.”
Philips has been working with the FDA on the test and research program and is in discussions with the regulator on details of the additional testing, the company said Friday. The regulator said it will use any additional information provided by Philips to further inform its analysis.
Recall Woes Mount
Last month, Chief Executive Officer Roy Jakobs said the company would be grappling with the consequences of the costly recall for another seven years.
Philips is being investigated by the US Department of Justice and remains in discussions with the FDA regarding a proposed consent decree, which may force it to cease some US operations until it completes corrective actions. Philips has not yet made any financial provisions for these matters, and is still facing class-action and potentially thousands of individual lawsuits.
Read More: Philips May Deal With Recall Fallout for 7 More Years, CEO Says
The additional tests requirement will result in another delay in the process, ING analyst Marc Hesselink said in a note. “We still need to see a consent decree with the FDA as well as the settlement on potential patient harm.”
The US regulator had placed CPAP and BiPAP devices on its shortage list due to a lack of supply. It has now removed them from the list after working with other manufacturers and government partners to make more machines available over the course of the recall.
–With assistance from Chiara Remondini.
(Updates with further details in 5th paragraph, analyst comments in 8th paragraph.)
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