* Getinge shares reach 2014 low
* CEO says cannot rule out FDA restrictions
(Adds conference call, shares, background)
STOCKHOLM May 26 Swedish medical technology
firm Getinge said troubles with the U.S. Food and
Drug Administration may be worse than previously thought and
raised the possibility of fines or restrictions on what products
it can sell in its biggest market.
Getinge cut its profit forecast in March, warning it faced
more than a year of heavy spending to improve quality controls
in manufacturing in its biggest business area, Medical Systems,
following inspections by the FDA, sending its shares down more
than 20 percent in one day.
The company cancelled a May 27 capital markets day late on
Sunday because of heightened uncertainty over the financial
impact of the potential actions by the FDA.
"If we had thought that we could rule out consequences in
terms of restrictions on individual product lines or facilities
etc., we wouldn't have talked about the remaining financial
risk," Getinge CEO Johan Malmquist told a conference call.
Getinge shares fell as much as 9.6 percent on Monday,
reaching a new 2014 low of 172.20 crowns. Medical Systems had
sales of 4.4 billion crowns ($666 million) in North America last
year, or about 18 percent of the group's sales.
Malmquist said new information had surfaced late last week
in the firm's dialogue with the FDA that had prompted it to
postpone the investor day. The company did not say which areas
of Medical Systems' quality control the FDA was most concerned
"This obviously, in our judgement, was severe enough to
provoke this change. We have expressed that there is an
outstanding risk, but this ... made it more tangible in a
sense," Malmquist said, adding it may take months to get clarity
on what consequences the firm might face.
In March, the company said it was reviewing controls at all
manufacturing units within Medical Systems, which accounts for
roughly half of group sales, and that consultants brought in to
address the issues would cost about 125 million crowns per
quarter for a period of six to seven quarters.
The FDA has issued warning letters to two of Getinge's U.S.
production units, in 2010 and 2012. Both of those belong to
businesses Getinge bought to expand in cardiovascular products.
Getinge's FDA problems come as the regulatory body appears
to be stepping up its business monitoring efforts. Last year, it
issued 6,760 warning letters, compared with just 474 in 2009,
although the number of recalled products remained roughly the
($1 = 6.6477 Swedish Crowns)
(Reporting by Sven Nordenstam and Johannes Hellstrom.)