Stryker’s Quality Control Effort to Cost Millions

As Stryker’s hip implant franchise took a $15 million to $20 million hit last quarter due to a recall and temporary production stoppage of its implantable hip cups, the company is spending millions of dollars instituting a corporatewide quality control program meant to resolve two FDA warning letters.

Stryker’s quality initiative was spurred by the warning letters citing two of the firm’s hip-manufacturing facilities — its site in Cork and its plant in Mahwah, N.J. After receiving the second letter, Stryker said it would link 25 percent of executive bonuses to compliance goals.

Stryker CEO Steven MacMillan said corporatewide remediation plans should be complete, for the most part, by the end of next year, and the firm will be in a much better position by the end of this year.

The company expects supply issues regarding the cups to ease soon. Although the company resumed production shortly after the temporary shutdown, MacMillan said unforeseen complications were associated with the recall.

In addition to logistical difficulties, MacMillan said the recall and warning letters required his sales representatives to spend time and energy reassuring customers. “We are in a new world now when these warning letters go out immediately on the internet, and there is all kinds of misinformation out there. Our reps had to do a lot of hand-holding and a lot of blocking and tackling to get things explained,” he said.