Philips recall gets costlier

AMSTERDAM, the Netherlands – Philips is increasing the provision for its recall by about EUR 225 million, mainly due to the higher volume of devices now requiring remediation and increased supply costs. 

The company says it has expanded the scope of certain older devices in the interests of patients and in alignment with the relevant authorities, and now expects to remediate a total of about 5.2 million registered devices globally. 

“Patient well-being is at the heart of everything we do at Philips, and we aim to get a solution to patients as fast as possible,” said Frans van Houten, CEO. “To date, Philips Respironics has produced a total of approximately 1.5 million repair kits and replacement devices, of which approximately 700,000 have reached customers. I am also encouraged by the positive VOC test results to date for the first-generation DreamStation devices, which we published in December 2021.” 

Philips has determined that exposure to the level of VOCs identified to date for the first-generation DreamStation devices is not typically anticipated to result in long-term health consequences, based on further testing by certified testing labs and a qualified third-party expert.  

The company made the disclosure as part of an update on its financial performance for the fourth quarter 2021 and full-year 2021. It expects group sales to be about EUR 4.9 billion for the quarter, about EUR 350 million lower than its expectations; and EUR 17.2 billion for the year, a 1% decline, mainly due to supply chain shortages, equipment installation delays and the recall. 

“We continue to see good demand for our innovative products and solutions, resulting in an all-time high order book,” said van Houten. “However, we faced significantly intensified global supply chain issues across our businesses, in addition to customer postponement of equipment installations in hospitals. We are closely working with suppliers and governments to address the shortages in the health care supply chain and ensure they recognize the importance of prioritizing life-saving medical equipment.”