This is a big blow for Philips.
The United States has just closed the door to Respironics, its subsidiary of respiratory devices used by patients suffering from sleep apnea and some of which turned out to be defective.
As part of an agreement signed with the Dutch giant, the American authorities have banned the sale of new potentially dangerous machines.
“Until the requirements of the authorization decree are met, Philips Respironics will not sell new (…) sleep therapy devices or other respiratory care devices in the United States
,” Philips said Monday.
The Philips respirator scandal began in June 2021. At the time, the US Medicines Agency (FDA) alerted the former electronics giant converted to medical equipment about the potential health risks posed by some of its breathing machines and ventilators.
The cause is the sound-absorbing foam (polyurethane) present in these respirators which disintegrates over time and which users can inhale or ingest.
The group then indicated that this could cause irritation and headaches, and even a
“potential”
risk of long-term cancer.
But last May, Philips reversed course, saying its devices were
“unlikely”
to harm patients.
However, in October, US health authorities requested additional testing.
Especially since, according to the Bloomberg agency, FDA officials have indicated that they have received 385 reports of deaths that could potentially be linked to the defective devices.
5.5 million devices recalled
In just over two years, Philips has recalled 5.5 million of these devices out of a total of 15 million, including 350,000 in France and 1.5 million across Europe.
But American and European authorities believe that these recalls are not fast enough.
“Resolving the consequences of the Respironics recall for our patients and customers is a priority, and I apologize for the distress and concern caused
,” Roy Jakobs, CEO of Philips since October 2022, said on Monday.
Resolving the impact of the Respironics recall on our patients and customers is a priority, and I apologize for the distress and concern caused
Roy Jakobs, CEO of Philips
As part of the agreement with the American authorities, Philips set aside 363 million euros in the fourth quarter.
And the group warned that new provisions to deal with repairs and recalls are expected this year.
“We are fully committed to respecting the consent decree, which constitutes an important step and provides a clear path forward
,” assures Roy Jakobs.
But, for Jefferies analysts
, “it will surely take years before Philips can resell sleep apnea machines in the United States.”
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“Detect any signs of overheating”
The bill linked to the respirator scandal promises to be very steep for the medical device giant: Philips has already taken 1 billion euros in provisions, and, in September, it agreed to settle a dispute worth at least 479 million dollars, underlines Bloomberg.
The group could also be the subject of class actions in the United States or be sued by thousands of users.
He is also the subject of an investigation by the American justice system.
And the public health center of the Paris prosecutor's office took up this health scandal at the end of 2022: a preliminary investigation had been opened a few months earlier for
"endangering the lives of others"
,
"aggravated deception and administration of harmful substances”
, following complaints filed by patients.
“Philips could pay between $2 billion and $4.5 billion to settle personal injury claims related to defective devices
,” Bloomberg analysts say.
Problems with other respirators could also arise.
In November, the FDA advised patients using Philips' DreamStation 2 machine (sometimes sent as replacements for faulty devices) to carefully monitor the device
"for signs of overheating."
The recalls of millions of respirators have destabilized the more than century-old group which has radically changed its face over the last ten years.
In 2022, the medical device manufacturer recorded a net loss of 1.6 billion euros and announced the elimination of 10,000 jobs worldwide.
Last year, it remained in the red with a net loss reduced to 463 million euros.
“While there is still work to be done, the progress we have made in an unstable world provides a solid foundation for sustainable performance
,” Roy Jakobs said on Monday.
But investors especially remembered the uncertainties surrounding the Dutch giant: on the Amsterdam Stock Exchange, the stock lost 4.4% on Monday.
Since June 2021, its market capitalization has been halved.