Shiley, Maker of Heart Valve, Put Up for Sale : Medicine: Its parent, Pfizer, denies that the move is a result of negative publicity and lawsuits arising from the device’s failures.
Shiley Inc., which faces hundreds of lawsuits over a defective mechanical heart valve that it made in the early 1980s, is up for sale.
Stock analysts have said for years that parent company Pfizer Inc. might seek to sell Irvine-based Shiley because of the bad publicity from the valve. That valve, which Shiley stopped making in 1986, has been linked by lawyers suing the company to nearly 300 deaths.
But Shiley officials said Tuesday that the sale has nothing to do with the negative publicity over the heart valves, which are implanted in 55,000 people who are still living. Many have sued for millions of dollars--even though their valves are intact--alleging emotional distress.
In more than 430 cases, the valves have fractured. Of those people, 265 have died, according to the company.
A sale won’t affect potential liability on the part of Shiley and Pfizer, spokesman Robert J. Fateaux said. Shiley will remain a Pfizer subsidiary even if all its businesses are sold, Fateaux said, to reassure heart valve recipients.
A Pfizer executive told stock analysts Tuesday in New York that Pfizer has had “preliminary discussions” with several potential buyers about the Shiley businesses but that the company would not identify them. In addition to heart valves, Shiley makes tracheotomy tubes, devices for pumping oxygen into the blood of open-heart surgery patients and blood-transfusion equipment.
With only $200 million in sales, Shiley isn’t a very large part of New York-based Pfizer, which makes drugs, hospital products, chemicals and animal health products. Officials at Pfizer, with $6.4 billion in annual sales, may believe that Shiley isn’t worth the aggravation, analysts have said.
However, Pfizer Executive Vice President Edward C. Bessey told analysts Tuesday that the company is selling most of Shiley and two other units because their products are in tough markets, and sales aren’t growing fast enough. For example, the number of tracheotomies performed each year--the insertion of a breathing tube into a patient’s throat--is “fairly stable,” said Fateaux, the Shiley spokesman.
Pfizer has also put up for sale a business that makes lasers used in doctors’ offices, and Deknatel, a major supplier of chest drainage systems.
The company declined to say how much it expects these businesses to bring if they are sold.
Pfizer’s hospital products group wants to keep only products in growing markets and where Pfizer’s technology gives it a leg up, Fateaux said.
In stable markets with lots of competition, companies must hold prices down. That, said Fateaux, is the case with Shiley’s transfusion and blood oxygenation businesses. (The transfusion device purifies blood from a patient’s wound and pumps it back into the body.)
Shiley’s oxygenation devices provide oxygen to the blood while a patient’s heart is being operated on.
Shiley won a round in its long legal battle in June, when a federal judge refused to combine thousands of recipients of the defective valve into a class-action lawsuit against the company.
The valve, the Bjork-Shiley Convexo-Concave valve, was implanted in 86,000 people worldwide between 1979 and 1986.
Under pressure from the federal government, Shiley late last year began to notify people worldwide who had been implanted with the valves.
The company said Tuesday that it was setting up a separate Shiley Heart Valve Research Center to research the faulty valves and continue notifying recipients. It will be headed by Dr. Roger Sachs, the company’s vice president and medical director.
Besides the Bjork-Shiley valve, Shiley also makes another type of heart valve that is sold only abroad. About 100,000 have been implanted in patient’s worldwide. Shiley is awaiting permission from the federal government to sell the device in this country.
Shiley Inc.at a Glance Headquarters: Irvine
* Business: Manufacturer of medical devices
* Parent: Pfizer Inc., New York
Employees: 1,100 U.S., 950 abroad
1990 revenue: $200 million
Founder: Don Shiley
Top executives: George Stewart, president; Roy Tanaka, vice president and general manager of U.S. operations
Worldwide sales by
product type:
Heart valves and other cardiovascular devices: 20% (was 50% a decade ago)
* Blood transfusion and other processing devices: 15%
* Blood oxygenators and other cardiopulmonary devices: 45%
* Tracheotomy tubes and other critical-care products: 20%
