GMP problems lead Siemens to suspend ultrasound shipments

March 2, 1994

Issaquah to resume deliveries in MaySiemens Medical Systems let fly a shocker last week: The Iselin,NJ-based vendor said it as suspending domestic shipments fromthree U.S. manufacturing facilities. The action is part of a consentdecree with the

Issaquah to resume deliveries in May

Siemens Medical Systems let fly a shocker last week: The Iselin,NJ-based vendor said it as suspending domestic shipments fromthree U.S. manufacturing facilities. The action is part of a consentdecree with the Food and Drug Administration concerning good manufacturingpractices (GMP) at the facilities. The facilities include theheadquarters of Siemens Ultrasound Group at Issaquah, WA. Otherfacilities affected by the agreement are the vendor's patientmonitoring facility in Danvers, MA, and a radiation oncology plantin Concord, CA. Siemens voluntarily suspended domestic shipmentsfrom the Concord plant last October (SCAN 12/29/93).

Under the terms of the agreement, Siemens will temporarilysuspend manufacturing and shipments of finished products fromthe three plants to U.S. customers. Manufacturing and shipmentsfor export will continue, however, as will parts delivery andservice.

The GMP problems at the facilities mostly involve proceduraland record-keeping issues related to the vendor's complaint-handlingsystem, according to Siemens president and CEO Robert V. Dumke.Neither the safety nor effectiveness of Siemens equipment is atissue, Dumke said.

The FDA stepped up inspections at the sites early in 1993.Siemens and the FDA have been involved in negotiations concerningthe consent decree for the past several months.

Siemens is building a new facility at Issaquah to take overmanufacturing of ultrasound systems, and that plant is not affectedby the agreement. The new plant will open in May, so there willbe a break of about two months in domestic ultrasound shipments.

The new plant will be better configured to comply with theFDA's GMP requirements, Dumke said.

"The older plant was one that came to us when we acquiredQuantum," Dumke said. "It was never laid out for manufacturing.When we move into the new facility, we laid it out for futureproducts, as well as more modern and better facilities for manufactureof our probes."

Siemens purchased dedicated ultrasound supplier Quantum MedicalSystems in 1990 (SCAN 4/11/90).

All told, the suspension of shipments will cause a declineof about 8% in U.S. sales for the three plants that are affectedby the agreement.

While the suspension is a black eye for Siemens at the moment,it shouldn't have a long-term effect on sales from the ultrasoundunit, which has a number of products in the development pipeline,Dumke said. "The products that we are talking about are stillsome distance away," Dumke said. "By then all thesematters will be well cleared up."

Fidelity puts past behind itFidelity Medical agreed last monthto pay $2.56 million in cash and $1 million in convertible preferredstock to settle a shareholders' class action suit. Efraim Landa,former president of the fluoroscopy image enhancement firm, resignedtwo years ago after revealing that the firm's balance sheet hadbeen inflated. He was replaced by a former top Siemens Medicalexecutive, Werner J. Haas, who serves as chairman and CEO (SCAN8/26/92).

Under Haas' leadership, Fidelity sold its wholly-owned Israelisubsidiary last year. That unit had contributed the bulk of companysales. The Florham Park, NJ, firm has since formed a 13-dealersales network in the U.S. GE scanner slips in under one yearGEMedical Systems received Food and Drug Administration market clearancefor its 1-tesla Signa MRI system in January, ten months afterapplying to the U.S. regulatory agency. GE hoped to have at least10 U.S. orders last month in addition to sales already initiatedin Europe, Latin America and Asia. Sales of Sopha variable camerapick upStrong sales of Sopha's variable-angle nuclear camera,the Sophycamera DST, are helping to turn the French company'sfinances around. Revenue for Sopha rose 11% last year, from 411million francs ($70 million) in 1992 to 457 million francs ($78million). The company continued to lose money but at a slowerrate. Profitability is projected for 1994.

Sopha has installed 75 Sophycamera DST systems, mostly in NorthAmerica, the company said. The nuclear computer and gamma cameravendor expects to reach 2000 delivered systems this year, halfof which are gamma cameras. Growth should continue with expansionin the Latin American market. Sopha is opening a Brazilian subsidiary,which will serve all of Latin America, the company said.