Smiths Medical, recently acquired by ICU Medical, communicated to customers on May 29 about a manufacturing flaw in some of their Bivona adult and pediatric tracheostomy tubes. This defect has the potential to cause the device to tear or become displaced, posing significant risks including “catastrophic adverse events.” This issue has unfortunately been linked to one fatality and 35 serious injuries. As a response, the Food and Drug Administration (FDA) has designated this recall as a Class I event, indicating it’s the most critical class of recall due to the risk of severe adverse health consequences or death.
The purchase of Smiths Medical by ICU Medical was finalized in a $2.35 billion transaction, where ICU Medical acquired the company from the London-based Smiths Group. This acquisition expanded ICU Medical’s product range to include syringe and ambulatory infusion pumps, along with vascular access and vital care devices. However, the merger has not been without its hurdles. ICU Medical CEO Vivek Jain acknowledged at the Morgan Stanley Global Healthcare Conference that the integration of Smiths Medical involved unexpected challenges, exacerbated by quality system issues that had previously damaged customer relationships and negatively impacted revenues.
The past year has seen multiple product recalls by Smiths Medical, extending beyond the tracheostomy tubes to include ambulatory and syringe infusion pumps because of software glitches, as well as emergency ventilators that were tied to eight serious injuries. Furthermore, ICU Medical inherited a warning letter during the acquisition which compounded their integration challenges.
Despite these hurdles, ICU Medical has initiated strategies aimed at improving the operational efficiency and integration of the Smiths Medical business. This includes significant cost reductions and the consolidation of their manufacturing operations to 10 facilities by 2026, down from 20 in 2022. Additionally, as part of their restructuring plan, they are reducing their workforce, which includes cutting 83 jobs in Minnesota due to the closure of a service and distribution facility.
CEO Vivek Jain remains optimistic about the future of the merged entities. At the recent healthcare conference, he noted some positive trends such as slight revenue growth, improving margins, better cash generation, and a more stable balance sheet, indicating a potential turning point in the integration process.
For the specific issue with the tracheostomy tubes, Smiths Medical has taken immediate action to mitigate the impact on patients and healthcare providers by instructing them to check their inventory for the affected device catalog numbers and to discard any compromised items. In response, customers affected by this recall have the option to either receive replacement products or a credit from Smiths Medical.
These steps are part of ICU Medical’s broader efforts to stabilize and strengthen the newly acquired Smiths Medical business, aiming to build on its portfolio while addressing the inherited challenges to restore trust and ensure patient safety.
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