Philips returns half a billion due to defective respirators

Philips actually wanted to focus on what the traditional Dutch company could do best from a management perspective: manufacturing medical technology products. But the group is now experiencing a serious setback in its core business, of all things.

The Amsterdam company said it has made millions of ventilators with noise-reducing foam that can break down into particles. These particles can be ingested or inhaled and may be toxic and carcinogenic. Philips doubled the provision in the balance sheet for projected costs in this regard to 500 million euros.

The company has issued a withdrawal notice for the United States only and a security advisory for the rest of the world. In the first quarter, a provision for quality defects in a sleep and respiratory therapy product division of €250 million lowered the quarterly result.

Billionaire’s deal with China

The recall is a setback for Philips as the company focuses on healthcare products. The company recently sold its home appliance business such as vacuum cleaners and coffee machines to the Hillhouse Capital investment fund of China for around €3.7 billion.

Sleep apnea is a sleep disorder in which breathing stops. Philips owns a number of respirators aimed at improving sleep patterns, many of which are sold within what is known as the DreamStation family of products. According to its own information, the company is working with the supervisory authorities on a comprehensive repair and replacement program for the affected devices.

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