Issaquah Plant Not Harmed By Fda Order, Siemens Says

Siemens Medical Systems and the Food and Drug Administration are at odds over the importance of the FDA's closure Thursday of Siemens' Issaquah plant and two other U.S. facilities because of manufacturing violations.

While FDA spokeswoman Sharon Snider said Siemens "has serious problems . . . which have caused them to produce defective devices," Siemens said its Issaquah operation will not be hurt.

Siemens, a subsidiary of German electronics giant Siemens AG, is moving its Issaquah production across town to a new plant that is not affected by the FDA action, spokesman Dan Rice said. The move is expected to be finished by May 1.

Rice said the company does not expect to lay off any of the 450 people who work at the Issaquah plant. The plant makes ultrasound equipment for U.S. and international markets.

Under the consent decree signed by Siemens and the FDA, the company will also close ultrasound plants in Danvers, Mass., and Concord, Calif.

Ragen MacKenzie analyst Andrew Heyward said, "it's certainly not good for Siemens. They are not the biggest player in the ultrasound market, but my understanding is they're trying to break in."

The FDA responded to complaints from doctors that Siemens' ultrasound machines failed to provide enough information to make a diagnosis. The FDA shut the plants down after issuing repeated warnings, Snider said.

The plants will continue to export equipment and to perform maintenance on machinery already in U.S. hospitals, Siemens President Bob Dumke said.

If, indeed, the dispute has little impact on the company, it would run counter to the experience of Redmond's Physio-Control.

The FDA shut down Physio's production lines for more than a year; the last products returned to production this week. The problem caused losses to Physio parent Eli Lilly estimated at between $125 million and $140 million and has caused Lilly to put the troubled subsidiary up for sale. Physio makes defibrillators to re-start hearts of cardiac-arrest victims.

The consent decree also requires that Siemens suspend imports from two divisions in Sweden and correct problems at five other plants. Siemens also must hire an independent evaluator to certify that its other facilities worldwide comply with FDA regulations.

In addition to ultrasound equipment, Siemens makes cardiac monitors, pacemakers and other medical products.

Rice said that no one had been harmed and that no safety issues were involved.