Sulzer Medica shares fall on recall fears
Sulzer shares fell amid concerns that the medical technology company could face several U.S. lawsuits over its voluntary recall of faulty hip implants.
But the company said $32 million in extraordinary income from a U.S. lawsuit settlement should cover the 2001 financial impact of the recall, made necessary by the discovery that some implants contained lubricant residue that could make them come loose.
Chief Financial Officer Josef Ruegg said the company also assumed it had adequate insurance to cover product-liability lawsuits that arose. He expected ``several'' of these, and noted two class-action lawsuits were already in the works.
The recall was announced in December, but went largely unnoticed in Europe until this week, when a U.S. law firm said it had filed suit on behalf of two people in the case that has started to be reported in the media.
Shares of the medical technology group, a separately listed unit of Sulzer AG, fell more than seven percent in early trade. At around 1030 GMT its shares were off 6.5 percent at 434.50 Swiss francs in a generally easier Swiss market. They had risen nearly 40 percent in 2000.
Sulzer , which has 74 percent of Sulzer Medica, was down 5.3 percent at 1,160.
``Sulzer Medica continues to assess the impact of the recall on its financial results for 2001,'' the company said in a statement.
``Although the company expects a slowdown in its U.S. sales of this particular product for the earlier part of 2001, it believes any impact will be more than offset by an already announced exceptional income item from the settlement of litigation.''
Sulzer Medica said its Sulzer Orthopaedics Inc subsidiary had introduced a series of new cleaning procedures for manufacturing the Inter-Op acetabular shells and was now confident it had solved the problem that triggered the recall.
Some 17,500 patients -- 90 percent of them in the United States -- have received the product and to date 129 cases of implant loosening have been reported. Its medical advisers did not recommend replacing the implants unless they came loose.
It said it was difficult to estimate the exact number of patients who may experience any problem.
``We deeply regret this incident. We accept full responsibility for the recall,'' Sulzer Medica Chief Executive Andre Buchel said in a statement.
``We will treat all patients fairly and apologise for any effect the recall may have on patients and their families. Sulzer Orthopaedics will address each patient's needs and concerns on an individual basis including reimbursement for out-of-pocket expenses not covered by insurance or Medicare.''
Sulzer Orthopaedics President Gary Sabins said the company had now taken every conceivable step to safeguard the implants and would do its utmost to restore trust and confidence in the firm.
Sulzer Inter-Op Shells Recalled | Overview of the Recall | News | Sulzer Hip Replacement Forum
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