Sulzer Medica faces massive bill over faulty hip implants

The latest news from Sulzer has done its stocks no good swissinfo.ch

The medical technology group, Sulzer Medica, has said it is not fully insured to cover the costs of surgery to replace faulty hip implants. The company, facing a massive bill for revision surgery, said some 1,700 operations to correct the problem has so far been carried out.

Sulzer Medica’s shares closed almost 14 per cent down at SFr285 ($162.86), following the company’s announcement. The Winterthur-based firm had said in March its product liability insurance was adequate to cover costs associated with revision surgery.

The company’s United States-based subsidiary, Sulzer Orthopedics, has reported that more than 1,700 revision surgeries, connected with the Inter-Op hip shell recall of December last year, have so far gone ahead. This is, according to Sulzer, considerably higher than expected.

“Sulzer Orthopedics can no longer maintain its formerly expressed opinion that it is sufficiently insured,” the company said, adding that it is “committed to a fair reimbursement of all medical expenses, lost wages, and pain and suffering incurred by the affected patients”.

However, it reported that the number of operations on a weekly basis was declining.

A Sulzer Medica spokesman said the company was speaking to its insurers about how to proceed in the case.

“It would be premature to speak about building provisions or their potential size,” he added.

The company recalled the Inter-Op hip shells last December when it discovered that the product was the cause for early loosening in some cases due to lubricant that was left on them during their manufacture.

Medica says it has changed its manufacturing process to prevent the problem from recurring and was checking other products as well.

By the end of April, 522 lawsuits had been filed in the US relating to problems with the implant, more than 90 per cent of them individual lawsuits.

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.

Switzerland’s Sulzer group holds 74 per cent of Sulzer Medica at present. However, at the last annual general meeting, Sulzer shareholders decided to spin-off the Medica unit. This is currently being implemented according to plan for finalisation this summer.

swissinfo with agencies