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Koninklijke Philips shares tumbled 11% on Monday after the Food and Drug Administration published its inspection findings at a U.S. manufacturing facility in Pennsylvania.
Philips
PHIA,
PHG,
had already recalled 15 million breathing assistance machines. The FDA raised concerns about the silicone foam used in the company’s replacement device and in the DreamStation 2, though the agency did not yet conclude the foam poses a risk to U.S. patients. Philips maintains the foam underwent significant testing.
The FDA inspection report also raised questions of when Philips first knew about problems. “While Philips enacted its Class I recall before any report of patient death, the FDA’s 483 Form observations arguably call into question whether Philips acted soon enough and whether it had the correct quality control and corrective and preventive action processes in place to prevent any patient harm,” said Scott Bardo, an analyst at Berenberg.
Kate Kalashnikova, an analyst at Citi, said the publication results in higher likelihood of punitive damages. “FDA Form 483 notes that Philips may have known about issues with polyester-based polyurethane foam, namely VOC emissions and foam degradation, for several years pre-recall, which increases the likelihood of punitive damages (if the court is satisfied that on the balance of probabilities it is more likely the case than not),” she said.
Also on the move was BBVA
BBVA,
which fell 4% on €2.25 billion bid to give it full ownership of Turkish lender Garanti. BNP Paribas
BNP,
shares rose 4% after a report from Reuters it’s assessing whether to sell its U.S. arm Bank of the West.
The broader European stock market was little changed, with the Stoxx Europe 600
SXXP,
edging up 0.1%. The index has climbed 22% this year.
