Medical devices major,
St. Jude Medical Inc.
) has received a warning letter from the U.S. Food and Drug
Administration (FDA) regarding a breach of manufacturing
practices at the company's Sylmar, California plant. The plant
manufactures implantable cardiac defibrillators (ICD) (including
Riata ST Optim and Durata leads) from the company's Implantable
Electronic Systems Division.
In late September 2012, the FDA had commenced an inspection at
St. Jude's Sylmar facility and issued Form 483 on Oct 17, stating
few observations about non-conformities with Current Good
Manufacturing Practice. On Oct 24, St. Jude sent a redacted Form
483 to the FDA, which identified issues mainly related to quality
systems and manufacturing defaults.
However, a detailed inspection report by the FDA in November
2012 contradicted the company's claim, revealing that the
observations are focused on the design verification, validation
and testing of the Durata lead. The FDA is concerned that the
newer generation Durata lead might face the same problem as the
Riata leads, which the company recalled in 2011.
As per the warning letter, the FDA will not clear devices from
the facility, which are related to the quality system problem
until the issue is resolved. The delay in product approval might
lead to competitors in the ICD space such as
Boston Scientific Corporation
) gain market share.
St. Jude claimed that the letter did not specify any
particular issue regarding the clinical or field performance of
any particular device. Hence, it will continue to make heart
devices at the Sylmar plant while trying to resolve the issue.
Further, the company believes that the letter will not impact its
The company in its third-quarter results had stated that it
was expecting the warning letter and hence the news comes as no
surprise. St. Jude's share price increased 1.46% to close at
$38.85 on Monday, Jan 14, 2013.
We remain on the sidelines until further details are available
from the company's fourth-quarter results, which are slated to
release on Jan 23. St. Jude currently carries a Zacks Rank #3
(Hold), which supports our long-term Neutral recommendation on
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