Reuters logo
UPDATE 1-Getinge says problems in U.S. may be worse than thought
May 26, 2014 / 11:32 AM / 4 years ago

UPDATE 1-Getinge says problems in U.S. may be worse than thought

* Getinge shares reach 2014 low

* CEO says cannot rule out FDA restrictions (Adds conference call, shares, background)

STOCKHOLM, May 26 (Reuters) - 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 about.

“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 same. ($1 = 6.6477 Swedish Crowns) (Reporting by Sven Nordenstam and Johannes Hellstrom.)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below