A Medical Device Daily

Physio-Control (Redmond, Washington), which makes Lifepak brand defibrillators, confirmed earlier this week that it is on track to resume full shipments by April 30 and that it is making progress toward improving previously reported problems.

The company voluntarily suspended shipments to U.S. customers in January, citing vague concerns about quality-control systems. A few weeks later, it eliminated 300 jobs, or about 30% of its work force.

The shipment suspensions served to delay a planned spin-off of the company by its parent Medtronic (Minneapolis) that was first disclosed last December.

Although the company has been servicing and repairing its products all along, as well as shipping to some international customers, it has been losing tens of millions of dollars. Physio-Control is among the largest automatic external defibrillator (AED) makers in the U.S., making hundreds of thousands of the devices that are found in schools, airports and other public areas and are used to shock hearts back into rhythm. It also makes manual defibrillators used by hospital and emergency workers.

Over the six-month period that ended Oct. 26, Physio-Control operated at a $30 million loss before interest and income taxes, and its net sales fell 37% to $133 million, according to Medtronic. Before this year's glitch, Physio-Control brought in about $400 million per year in sales, or about 3.5% of Medtronic's $11.3 billion annual revenue.

Over the past 11 months, Physio-Control "has made progress in improving its quality systems," a Medtronic spokeswoman told the Seattle Post-Intelligencer. In August, the company began making limited products available to U.S. emergency care providers to "support the needs of public health."

"While the issues are not fully resolved, substantial resources have been placed on improving the quality processes," spokeswoman Cindy Resman said.

The company is working with the FDA on corrective actions, but the government has not yet scheduled inspections.

"The FDA does regularly conduct inspections of company facilities," Resman said. "We do anticipate that will be the case for Physio-Control, however, nothing has been scheduled at this point."

The FDA hasn't issued a serious recall for a Lifepak defibrillator since 2005, when 2,000 were pulled off the market.

However, Medtronic has issued five "class two" recalls in 2007 for Lifepak products, and seven such recalls in 2006. A "class two" recall means that "there is either a possibility that the device will cause temporary or reversible health problems, or there is a remote chance that the device will cause serious health problems," according to the FDA.

In recent filings with the Securities and Exchange Commission, Medtronic reported that it still plans to pursue the spin-off, though worsening market conditions may prevent that from happening in the near future.

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