Philips sleep disorder threatens a rising invoice

Philips CEO Frans van Houten presents financial in Amsterdam, the Netherlands, January 29, 2019. REUTERS / Eva Plevier

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, Nov. 15 (Reuters Breakingviews) – A night’s sleep is a luxury that Koninklijke Philips (PHG.AS) investors may not have for some time. The Dutch electronics giant’s shares fell 11% Monday morning after Chief Executive Frans van Houten said the U.S. Food and Drug Administration (FDA) asked them to conduct new tests on foams used in 4 million recalled respirators. The regulator also said the company’s new design may be inadequate.

The ventilators are designed to help restless sleepers. But the polyester-based polyurethane foam that keeps them quiet can cause the user to inhale toxic and potentially carcinogenic chemicals. Philips has already provided 500 million to repair the recalled devices. In addition, due to the discontinuation of new production, around 700 million in annual sales will be lost. If the company doesn’t meet the FDA, it could be forced to spend more and stop manufacturing longer. The $ 4 billion decline in the company’s market value suggests investors are also concerned about litigation. The Philips nightmare may only be beginning. (by Aimee Donnellan)

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Editing by Peter Thal Larsen and Oliver Taslic

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