) has received a Class I recall of its ShapeMatch Cutting Guides
from the U.S. Food and Drug Administration ("FDA"). The recall
was issued because the regulatory body claims that the device may
have breached the planning ranges mentioned in the 510(k)
clearance or was not made according to surgeon's pre-operative
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Manufactured from patient-specific three-dimensional imaging
data, the single-use ShapeMatch guides are designed to be
exclusively used with the company's Triathlon knee replacement
system. The device had secured the 510(k) approval in May 2011.
The company stopped selling the product from Nov 2012 and had
voluntarily recalled it in Jan 2013. Although this is a setback
for Stryker's knee franchise, management believes that it would
not adversely affect sales of the Triathlon system or the
Triathlon standard instrumentation.
In 2012, revenues from Stryker's Knee business, under the
Reconstructive segment, increased 4% year over to $1,356 million.
Although the franchise is benefiting from the GetAroundKnee
Direct-to-Consumer campaign, the business segment is likely to
face competitive pressure going forward. The highest risk
classification from the FDA might adversely affect top-line
growth of the knee business.
Recently, in Mar 2013, Stryker had received a warning letter from
the FDA following an inspection at its Portage facility at Mich.
The warning was issued due to a quality systems-related issue at
the facility as well as the marketing of unapproved medical
devices, including the Neptune Waste Management system. In Jun
2012, Stryker started a Class 1 recall of its Neptune system due
to the severe injuries caused by the device.
Stryker had also globally recalled the Rejuvenate and the ABG II
Modular hip stem in Jun 2012 due to some product defaults, which
caused adverse local tissue reactions. If such a trend continues,
it might lead to a decline in the company's market share.
Stryker carries a Zacks Rank #3 (Hold). While we remain on the
sidelines regarding Stryker, companies like
), both carrying a Zacks Rank #1 (Strong Buy), as well as
), which carries a Zacks Rank #2 (Buy), are expected to do well
in the medical industry.