Valve Recall’s Effect May Be Minimal : Shiley’s Reputation, Market Share Will Help It, Analysts Say
Although there is no way to forecast the potential liability that Shiley Inc. may face as a result of defective heart valves it has produced, industry analysts predict little long-term difficulty for the Irvine-based company or its New York-based parent, Pfizer Inc., following Friday’s voluntary recall of three sizes of a controversial valve.
Shiley holds about a 25% market share in the heart valve industry, estimated to be worth about $100 million annually worldwide, according to Jules Marx, president of the med-tech division of the New York-based D. H. Blair & Co. investment firm.
During 1984, Shiley accounted for about $120 million, or 3%, of Pfizer’s $3.8 billion in revenues, making the company a relatively small cog in the machinery that makes up the pharmaceutical giant.
“It used to be that if you had a recall, it was very traumatic for the company, but now the doctors have gotten so used to it that they are much more accepting of (a) company’s product,” Marx said. “Unless there is criminal negligence involved or serious problems involved in the integrity of the company, they are usually willing to forgive and forget.”
Deaths Reported
Still, thousands of the heart valves have already been implanted. Shiley said that 14 people have died after malfunctions occurred among the three types of valves that were recalled. Others say the actual death toll from the full line of Shiley valves may be much higher. Dr. Sidney Wolfe, executive director of Public Citizen Health Research Group in Washington, and officials with the Food and Drug Administration said about 100 people have died worldwide after as many as 150 Shiley heart valves fractured.
“Certainly, if liability cropped up as a bigger part of the issue, then there could be problems,” said Bob Hodgson, an analyst with the New York investment firm of Oppenheimer & Co. Already, there have been several lawsuits filed by recipients of heart valves that have malfunctioned.
Frank Haskins, Shiley’s executive vice president, said the company doesn’t expect any trouble with the valves that have been implanted and has no plans to recall those already implanted. Heart specialists said the risk of repeat surgery to remove the controversial valves would be greater than the risk of potential valve failure.
Haskins, who said that Shiley learned of the defective mechanical heart valves last month through “statistical analysis of data” it collected, said the implanted valves have a “low probability of fracture.”
Tony Biesada, a spokesman for Pfizer, which acquired Shiley in 1979 for about $63.9 million in stock, said that heart valves make up a “relatively small part of Shiley’s product line and that the company is not alarmed over 2,700 possibly defective valves that are currently in use.
Doubt Expressed
“I would seriously doubt that there is any necessity for removing 2,700 valves,” Biesada said, adding that valves currently being recalled by Shiley will remain “available to surgeons who believe that they are the only suitable valves for their patients.”
The effect of the Shiley recall on giant Pfizer is minimal, Biesada said. “We’ve been talking to the analysts and what we’ve been telling them is that if you look at the whole product mix . . . the impact on Pfizer sales and earnings is not significant,” he said.
“From a sales standpoint, Shiley is a very small part of Pfizer’s sales,” said Hodgson, of Oppenheimer & Co. “The current impact is small. When you recall 200 of these devices, you are not talking about a lot of money.”
“In general, Shiley . . . has a fairly good reputation in the field, as do Pfizer’s other operations,” Hodgson added. “This certainly is not a plus for Shiley . . . (but) I don’t see that it would have that great an impact.”
