The U.S. Securities and Exchange Commission (SEC) reported that Royal Philips NV will pay more than $62 million in connection with “irregularities in the medical device industry” related to its Chinese subsidiaries. The charges arise from actions that occurred between 2014 and 2019 from sales of medical diagnostic equipment in China.
Med-tech companies are facing a new reality of high interest rates, inflation, bank failures, and geopolitical turmoil that are impacting financing and M&A opportunities. To secure finance and attract partnership deals they must keep their product simple, focus on proof of concept and ensure that it has quality, delegates at the LSX World Congress in London heard during a panel presentation.
Gilde Healthcare Partners BV raised €600 million (US$658 million) in capital commitments for a new investment fund which will be deployed into companies across Europe and the U.S active in digital healthcare, medical technology and therapeutics. The fund, ‘Venture&Growth VI’, will focus on investing in fast growing companies developing solutions for better care at lower cost.
Philips RS North America LLC, formerly known as Respironics Inc., has agreed to pay more than $24 million to settle allegations that the company violated the False Claims Act in relation to CPAP equipment, another hit on the company which has been dealing with a stream of FDA recalls for these products. The allegations include that Philips RS provided durable medical equipment suppliers physician prescribing data to help these suppliers market their inventory, an unusual vector for violation of the FCA.
Royal Philips NV released a grim annual report for 2022 that showed a little willingness to share the pain of an unabashedly awful year for the health tech company, which has been plagued by a recall fiasco that has bled into multiple years. Shareholders lost much of their investment with the company’s more than 60% drop in market value in 2022, 10,000 employees faced job loss and all current members of top management waived their annual incentive payouts. Notably, former CEO Frans van Houten, who was replaced in October and oversaw the ill-fated recall, did not waive his bonus of $208,370.
Royal Philips NV revealed plans to cut a further 6,000 jobs on top of the 4,000 announced in October as it sought to stabilize the business and improve its operational performance going into 2023. In total, the company will reduce its workforce by about 13%. Philip’s fourth quarter results came in ahead of consensus expectations, but the company still posted a loss of €105 million (US$108.2 million).
Continuous positive airway pressure (CPAP) devices made by Philips Respironics Inc. are still presumed by the U.S. FDA and other regulators to present a health hazard to patients, but the company’s latest data seem to suggest otherwise. In a Dec. 21 statement, the Royal Philips subsidiary said that testing suggests no appreciable harm to health related to particulate matter emissions from the polyester-based polyurethane (PE-PUR) foam in these devices, and that there is no evidence of long-term harm associated with volatile organic compounds (VOCs), both of which are conclusions with which the FDA may not agree.
Just days after taking the helm of Royal Philips NV, CEO Roy Jakobs told shareholders that the company plans to “immediately reduce our workforce by around 4,000 roles globally” as a result of multiple challenges that contributed to poorer than expected third quarter results. The company posted a net loss for the quarter, missing consensus, which it attributed to continuing supply chain issues and the deteriorating economic environment.
For a company that dominates the market for devices designed to improve breathing during sleep, Royal Philips NV has had the devil of time catching its own breath over the last 15 months as it has issued wave after wave of recalls.
Shares in Royal Philips NV fell by almost 10% on July 25 after the company stated that its second quarter Q2 sales deteriorated amid supply shortages and prolonged lockdowns in China. Group sales for Philips amounted to €4.2 billion (US$4.29 billion) in the second quarter of 2022, representing a 7% year on year decline. Management reduced its 2022 outlook to 1%-3% organic sales growth from a previously estimated 3% to 5% growth and said it expects growth of between 6% and 9% for the second half of 2022.
