Philips shares fall after FDA says sleep device recall inadequate

Philips office building in Warsaw, Poland on July 29, 2021. (Photo by Beata Zawrzel/NurPhoto via Getty Images)

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Shares of Dutch health tech company Philips tumbled to the bottom of the European benchmark on Friday, after the U.S. drug regulator deemed its handling of a major product recall inadequate.

The Amsterdam-listed stock was trading more than 9% lower at 2 p.m. London time, paring some losses after falling by as much as 10% earlier in the session.

The announcement reflects yet another blow to Philips over the recall of millions of ventilators used to treat sleep apnea, which CEO Roy Jakobs earlier this year said would be the the firm’s “highest priority.”

The U.S. Food and Drug Administration (FDA) said overnight that it does not believe that “the testing and analysis Philips has shared to date are adequate to fully evaluate the risks posed to users from the recalled devices.”

The FDA said it finds additional testing is necessary and noted Philips agreed to carry out this request.

In response to the FDA, Philips said in a statement that its “first priority is the health and well-being of patients, both in terms of providing replacement devices and testing to seek more clarity on the safety of the sleep and respiratory care devices under the recall.”

The company added that it shares the same objective as the FDA and other regulators “to ensure the highest standards of patient safety and quality in the delivery of healthcare.”