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Though finishing 2016 with an optimistic financial outlook, Stryker Corp. (NYSE:SYK) is still plagued by recalls and lawsuits that will affect its bottom line.
According to Stryker’s preliminary fourth quarter and full year financial reports:
- Fourth quarter net sales were up 16.3 percent to $3.2 billion, with full year net sales growing 13.9 percent to $11.3 billion.
- Domestic net sales reached $8.2 billion in the full year, a 15.9 percent increase.
- International net sales were up 8.8 percent to $2.1 billion.
- Fourth quarter net sales for the Orthopedics business segment were $1.2 billion, up 5.3 percent.
- Full year net sales for the Orthopedics business segment were $4.4 billion, up 4.7 percent.
Stryker also agreed to at least eight corporate acquisitions in 2016, with the $2.8 billion Sage Products purchase and the $1.3 billion Physio-Control transactions being the largest. Further, Stryker announced a $130 million project to build a new research and design center for its Stryker Instruments division in Portage, Michigan.
Despite the apparent success, Stryker still suffers from adverse financial consequences and bad publicity from recalls and lawsuits involving its failed hip implants.
Stryker Hip Implant Lawsuits
In November 2014, Stryker settled approximately 3,000 Rejuvenate Hip Stem and ABG II Modular Hip Stem lawsuits in New Jersey’s Bergen County Superior Court, the 17th Judicial Circuit Court of Florida, the 15th Judicial Circuit Court of Florida, and the multidistrict litigation (MDL) consolidated in the U.S. District Court, District of Minnesota. Plaintiffs in these lawsuits asserted that Stryker failed to warn about the high failure rate of its ABG II and Rejuvenate hip components, leading to metal poisoning, tissue damage, bone damage, swelling, chronic pain, and other adverse complications. Pursuant to the settlement, Stryker agreed to pay hip implant patients a base award of $300,000 for each revised hip, with additional compensation for patients who had complications during revision surgery to remove the hip implant (In Re: Stryker Rejuvenate and ABG II Hip Implant Products Liability Litigation, Stryker Hip Lawsuit MDL No. 2441).
On December 19, 2016, presiding U.S. District Judge Donavan Frank, ordered that individuals who had initial implant surgery and revision surgery by December 19, 2016 were eligible to participate in the settlement. Further, hip implant patients who were eligible for the settlement in November 2014 but did not enroll were deemed still eligible to participate in the settlement.
The hip replacement implant failures at issue relate to the use of metal-on-metal hip implants, or hip implants with increased use of metallic parts intended to withstand greater wear and enhance lifespan profiles. Unfortunately, these implants have actually failed early due to metal blood poisononing, or metallosis (which occurs when high levels of chromium and cobalt ions shed as debris from friction between the components enter the surrounding tissue and bloodstream), inflammation of surrounding tissue, or loosening of components which threatens patients’ stability and mobility.
In November, Stryker voluntarily recalled another artificial hip component, its LFIT Anatomic CoCr V40 femoral heads hip implant. According to an urgent recall letter Stryker sent to orthopedic surgeons nationwide, the company had received “higher than expected complaints of taper lock failure” of certain sizes of the femoral heads manufactured prior to 2011. Stryker advised that taper lock failure could result in a hip implant recipient’s loss of mobility, pain, inflammation, broken bones and other injuries. These failures are often associated with metallosis and increases the risk of hip implant failure. Many hip implant patients were forced to undergo revision surgery to have the implants removed or replaced after having them implanted for just a short period of time. More than likely, these lawsuits will be consolidated for pretrial proceedings in an MDL to reduce duplicative discovery regarding common issues in the cases, avoid conflicting pretrial rulings and make it more convenient for the parties, witnesses and the courts.
Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation
At least three separate juries returned sizable damage awards in 2016 for women diagnosed with ovarian cancer following their use of talcum powder for feminine hygiene purposes, confirming Plaintiff allegations that warnings and information about the risks of cancer were in adequate and/or withheld from consumers. In addition to compensatory damages, Johnson & Johnson was ordered to pay punitive damages designed to punish the company and other defendants for their actions surrounding the faulty marketing and research of talcum powder. All talcum powder cancer lawsuits filed in U.S. District Courts nationwide are now centralized in an MDL before U.S. District Judge Freda L. Wolfson in the District of New Jersey. Jury selection for the next trial is scheduled to begin in April 2017.
Johnson & Johnson has sold baby powder for over 100 years. Since 1971, studies have linked the talc in baby powder to ovarian cancer, when British researchers discovered talc particles in ovarian tumors. Twenty-two additional epidemiological studies also discovered a link between the talc in baby powder and ovarian cancer. Though Johnson & Johnsnon engaged an independent consultant in the 1990s to investigate the link between talc and cancer, and it is reported that the consultant advised the Johnson & Johnson to not use talc in its baby powder products, the company has continued to do so.