Philips, after a year and a half marked by recalls of millions of sleep and respiratory devices, has outlined several measures aimed at enhancing patient safety. The plan was unveiled after the company published its fourth-quarter and 2022 annual earnings results on Jan. 30.
According to a company press release, Philips intends to complete the Respironics recall and test program in 2023 and manage the impact of the proposed consent decree, as well as the ongoing investigation by the US Department of Justice and the litigation related to the Respironics recall.
Across the company, Philips says it will ensure patient safety and quality is at the core of its innovation approach to avoid future issues. Additionally, the company “will step up accountability for patient safety and quality,” including giving all employees dedicated patient safety and quality objectives, deploying an expanded compliance and awareness program, and simplifying processes.
As for its fourth-quarter earnings, Philips saw some improvement over Q3. Group sales amounted to EUR 5.4 billion, with 3% comparable sales growth driven by component supply improvements, though Philips says supply chain conditions remain challenging. Group sales for the year amounted to EUR 17.8 billion, with a 3% comparable sales decline due to operational and supply challenges, lower sales in China, the consequences of the Respironics field action, and the Russia-Ukraine war.
In addition to laying out plans to bolster patient safety, Philips announced actions to address operational challenges in an uncertain environment, including further reducing its workforce by around 6,000 roles globally by 2025.
“2022 has been a very difficult year for Philips and our stakeholders, and we are taking firm actions to improve our execution and step up performance with urgency,” says Roy Jakobs, CEO of Royal Philips, in a press release. “When I took over as CEO in October 2022, I said that our priorities are first to further strengthen our patient safety and quality management and address the Philips Respironics recall; second, to improve our supply chain reliability to convert our order book to sales and improve performance; and third, to simplify how we work to increase agility and productivity. This is a step-by-step improvement journey supported by our leading market positions, extended customer base, meaningful innovations, ecosystem partnerships, strong brand, and talented employees.
“As we are working through the operational challenges, we progressed on our execution priorities in the fourth quarter. We provided an important and encouraging update on the complete set of test results for the first-generation DreamStation sleep therapy devices and have completed around 90% of the production for the remediation. We were able to secure more components to convert our order book into sales, although the supply chain situation remains challenging. Our order book remains strong, despite the comparable order intake decline in the quarter,” he says.
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