Physio suspends product shipment

Medtronic's Physio-Control unit indefinitely suspended shipments of external defibrillators and other emergency-response gear because of quality-control problems at a factory in Redmond.

The suspension will address weaknesses in "the overall quality system" in the Redmond factory that were identified by the Food and Drug Administration (FDA) and the company, Medtronic spokesman Rob Clark said in a telephone interview. The weaknesses are related to manufacturing processes and not individual products, he said. No products are being recalled.

The halting of product shipments means Medtronic will delay the spinoff of Physio-Control as an independent public company, which had been planned for mid-2007. Clark said that while it is unknown how long the transition will be delayed, Medtronic plans to spin off the unit once the problems are fixed.

Clark said "we cannot rule out" the possibility of layoffs at Physio-Control, which has about 800 employees in Redmond.

In December, Medtronic said the Physio-Control division would have about $450 million in sales for fiscal 2007, with annual growth of 10 to 12 percent forecast.

In an interview with The Seattle Times, Physio-Control Chief Executive Officer Brian Webster said he expected the spinoff to have an initial market capitalization of $700 million to $1 billion on the New York Stock Exchange.

In 1992, Physio halted production of its main defibrillator products after the FDA uncovered problems with the company's testing and documentation procedures, according to Seattle Times reports at the time.

That shutdown, during which Physio was owned by Eli Lilly, lasted about a year and a half.

Seattle Times staff contributed material on the 1992 production halt.