Sulzer Medica warns earnings could be hit by implant recall
Sulzer Medica could face "significant" exceptional costs related to the recall of hip and knee implants that could "materially" affect earnings, the Swiss company said on Monday.
Reiterating earlier statements, Medica, which is due to be spun off from Swiss industrial group Sulzer on July 10, said it believed it was likely that costs linked to both cases would exceed the limits of existing insurance cover.
It said that as per June 1, about 800 lawsuits had been filed. More than 1,900 revision surgeries for the InterOp implant have been reported and about 65 operations have been reported to replace porous tibial baseplates in knee surgery.
Medica has repeatedly said that the knee and hip implant problems will have no impact on the demerger, while also stressing that any product liability issues cannot affect Sulzer since the two companies are legally independant entities.
Medica said that the number of patients needing revision surgery of the faulty plates “could be substantial”.
The firm has given no indications as to the possible costs of the product problems or the insurance cover. It made its latest statement in filing its annual report with the Securities and Exchange Commission in the United States where its share are also listed.
The product problems have hit Medica shares, which fell six and a half per cent during Monday’s session to close at SFr130. The stock is now just above its year low of SFr125.
Medica started the recall last year after it became aware of a fault in its Inter-Op implants. Most patients affected are in the United States.
The cost of the recall is being put by some analysts at up to SFr1 billion ($560 million). Medica says it has changed its manufacturing process to prevent the problem from recurring and was checking other products as well.
The company has already rejected as “unjustified” allegations seeking the payment by Sulzer Orthopedics of punitive damages as a result of the product recall.
The orthopedics subsidiary, based in the city of Austin in Texas, initiated the voluntary hip replacement last December and said it would cover patients’ out-of-pocket medical costs.
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