Sulzer Medica plunges into the red

Sulzer Medica's bottom line has been hit by claims for faulty joint implants swissinfo.ch

The medical technology company, Sulzer Medica, has posted a first-half loss of SFr608 million ($380.7 million). The figure includes provisions for a class settlement of US lawsuits arising from faulty hip implants.

The charges incurred for the replacement of the faulty hip joints and knee implants were SFr875 million ($546 million) in the second quarter of the year. The company said the problems connected with the faulty products would require substantial payments to affected patients and that it would affect earnings for the next three to five years.

“All practicable measures will be undertaken to compensate patients quickly and fairly. At the same time, I will do everything I can to ensure these measures do not compromise the viability of the company,” said chief executive officer, Stephan Rietiker.

On Tuesday, a judge in Los Angeles issued an injunction suspending more than 1,000 product liability suits against Sulzer Medica. On Wednesday, a court in Ohio also granted a motion to suspend individual lawsuits.

“This injunction represents a positive step towards the success of the proposed class settlement,” said a company statement.

The lawsuits relate to last December’s recall of hip joints produced by the company’s US subsidiary after they were tainted with machine oil that prevented them from bonding with bone and resulted in them loosening from patients. Many now need replacement operations.

Sulzer Medica says there is a chance that its $783 million dollar provision to settle the cases may have to be increased.

Analysts welcomed the injunctions but said Sulzer Medica’s future remained uncertain until it became clear how many patients would opt in to the settlement.

US sales have been badly affected by the crisis, falling by about seven per cent in the current year. But the decline has been more than offset by an increase in European and Asian sales and the company said full-year sales should reach at least the 2000 figure of SFr1.35 billion.

Sulzer Medica shares have lost more than three quarters of their value since the beginning of the year.

swissinfo with agencies