Philips is facing renewed scrutiny from U.S. regulators after the Food and Drug Administration (FDA issued a formal warning letter citing serious violations at three of the company’s manufacturing sites. The FDA’s findings, made public Tuesday, triggered a sharp 6% drop in Philips’ share price, reflecting investor concern over the company’s ongoing regulatory challenges and reputational risks.
The FDA inspection revealed non-compliance with production standards at one facility in Eindhoven, Netherlands, and two locations in the United States. The agency highlighted deficiencies in Philips’ complaint handling and quality control procedures critical components of regulatory compliance in the medical device industry. If the company fails to address these issues, the FDA may impose financial penalties or other enforcement actions.
This warning comes at a sensitive time for Philips, which is still grappling with the fallout from its sleep apnea device recall. The recall, which began in 2021 due to concerns over potentially harmful foam degradation in certain respiratory devices, has already cost the company billions in legal settlements, product replacements, and reputational damage. Earlier this year, investors filed claims totaling €800 million related to the scandal, underscoring the financial toll of the crisis. In a statement, Philips said it takes the FDA’s concerns “very seriously” and is actively working to improve its manufacturing processes and product safety standards. The company emphasized its commitment to regulatory compliance and restoring trust among patients, healthcare providers, and investors.
The latest developments add pressure to Philips’ turnaround strategy, which includes streamlining operations and focusing on core health technology segments. Analysts warn that continued regulatory setbacks could hinder the company’s recovery and weigh on future earnings.