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Philips says updates are ‘imminent’

Philips says updates are ‘imminent’ Company is on track to remediate recall within 12 months, officials say 

Frans van HoutenAMSTERDAM – Philips could hear back from the U.S. Food and Drug Administration in August about its plans to replace the foam in certain CPAP devices and ventilators, based on a timeline provided during the company’s July 26 conference call to discuss financial results for the second quarter. 

Philips filed "multiple packages" of CFR 806 applications for corrections and removals with the FDA in June and CEO Frans van Houten said, based on prior experience, there’s typically an eight-week turnaround. 

“I cannot say exactly when we get approval, but I can say that the FDA is on top of it and working very diligently,” he said. “In anticipation, we have already produced repair kits and we’ve also even placed stocks in bonded warehouses in a few countries in the world so that we can move quickly out of the gate. We are all ready to go and I would expect that imminently we should be able to give updates on that.” 

Philips reported a 16% decline in sales for its Connected Care business, which includes Sleep & Respiratory Care, for the second quarter of 2021 compared to the same period last year, in the wake of the massive recall of certain CPAP devices and vents. Mid-single-digit growth in Hospital Patient Monitoring was more than offset by a double-digit decline in Sleep & Respiratory Care, the company says. 

van Houten said Philips expects to ramp up production of DreamStation 1 and DreamStation 2 devices, as well as repair kits, to 80,000 units per week in the fourth quarter, up from 50,000 in the third quarter and 30,000 before that. 

“Now, if you multiply that times the number of weeks, then you get somewhere between 3.5 million to 4 million units, right, and hence the 12 months expected throughput time on this,” he said. 

Philips is limited in how much it can increase production due to supply constraints, van Houten said. 

“We would be able to go faster if we could get our hands on the scarce materials from some of our suppliers, so we have been helping our suppliers with mold capacity, etc., so that they can ramp up faster,” he said. “If we see they can go faster, then we aim to shorten the 12 months, if possible. It’s too early to speculate on that. But certainly, that would be our aim, because that’s better for patients and, obviously, the sooner we can resume sales, that’s better for our own business.”  

While the recall weighs heavy on Connected Care, company officials also pointed out that the business unit faced tough headwinds in the second quarter this year, when you consider the higher than usual sales in the second quarter last year due to the COVID-19 pandemic. 

“Let me remind you that Connected Care faces a high comparison base from the spike COVID-19 generated demand that resulted in 22% sales growth for the full year and 32% in the second half of last year,” said Abhijit Bhattacharya, CFO. 


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