Stryker Corporation reported a 13% reduction in stock value, which equates to millions of dollars, for the first quarter. Analysts comment that the reduced earnings are mostly due to the mounting number of lawsuits and increasing potential liability it faces for its recalled devices.
The company produces orthopaedic devices, i.e. hip implants, and has been reporting profits north of $300 million quarterly since last year. While some were expecting the company to again report profits above $1 per share, many felt that these projections failed to appreciate the potential negative effect the company’s recent product recalls would have on earnings.
In June of 2012, Stryker Corp. announced a voluntary recall of its Rejuvenate and ABG II modular-neck hip stems. Patients were warned to consult their physician for possible device failure, fretting or corrosion of the modular neck junction, osteolysis, joint loosening or dislocation, metallosis, tissue inflammation, necrosis, pain, hypersensitivity or allergic response.
Stryker has also announced the recall of three of the Neptune surgical waste removal systems. The devices have reportedly caused at least one death due to the failure of Stryker to properly instruct physicians regarding the use of the device. The Neptune system collects surgical waste and disposes of it in a manner that prevents healthcare workers from being exposed.
According to Stryker, “At this time, FDA does not consider the Neptune Silver, the Neptune 2 Ultra (120V) or the Neptune 2 Ultra (230V) to be legally marketed devices because their safety and effectiveness has not yet been determined. As such, FDA advises the devices not be used.”
But the risk to patients and the lack of approval has not slowed the company down.
“We delivered solid sales and earnings performance, and expect this momentum to continue throughout 2013,” Kevin Lobo, President and CEO, remarked.