All right, thank you very much, and, thanks everyone for joining the call with the short notice here. We just wanted to take the opportunity to provide a little bit more information and background about the press release that went out today about the warning letter to our factory in Mahwah. So if we could move directly to page 2, please. So just to refresh everybody's minds here, we come from a history of companies in a holding structure, with a history of underinvestment within the quality management system and quality organization, which ended up with entering Consent Decree with FDA in February 2015. There's been a number of activities going on in terms of remediating the affected factories since then.
We put a ring-fencing structure into place in Q4 of 2016, and this was to take them out of the normal operation structure of the group. And we made sure that they are managed separately with full focus on remediation. We did a retake in the Hechingen site in Q2 of 2017, and since the middle of 2017, we've really made a lot of progress and been in an intense remediation phase in the factories under the Consent Decree with FDA. 2018 has well been a year of full speed ahead with remediation.
So that's a very brief recap of the timeline, and we can move to page number 3 just to confirm where we are in the different sites here. So when it comes to the Wayne site, we are remediated both in terms of the quality management system and the product documentation. Same thing goes for Merrimack. Whereas in Hechingen, we have an updated quality management systems, but still a lot of work to do in regards to the product documentation. So we've said, and I repeat again, that Hechingen is about 2-3 years behind the U.S. sites in their work. So that's the status, and nothing has really changed in regards to the overall remediation progress and program.
So with that, we can move to page number 4, please. So a little bit of background then on the warning letters to Mahwah and Fairfield. So these are the sites that produce our intra-aortic balloon pump range. So Fairfield produces the disposables, and Mahwah produces the pumps, the hardware for the balloon pumps. So when it comes to Fairfield, in the wake of the discovery in Hechingen that we had to retake on the remediation, we did an internal audit of all our sites as well. And the findings in both Mahwah and Fairfield were in the fourth quarter of 2017, that we had some shortcomings that we needed to fix.
So we started remediation in the fourth quarter, right away when we discovered this and found out the plan for this. After that, internal discovery and the start of remediation, we had an FDA inspection in Fairfield in the spring of 2018. And this led to a warning letter in September of last year, which you're already well aware of. In Mahwah, we had our internal findings also in the fourth quarter of 2017. Remediation started, and we had an FDA inspection in the autumn of 2018, which has now generated a warning letter in February of this year.
The findings here and broad overview of the findings relates to procedures and processes linked to requirements on supplier control, approval of design changes, and medical device reporting. And I want to underline that in neither of the sites, we've had any patient risk-related findings. And since we have been working on this since the fourth quarter of 2017 and all the way through 2018, you are already aware that the increased part of the increase that we've had in quality-related costs are related to this remediation work. So from that standpoint, we deem the financial impact going forward to be non-material.
In terms of the time plan, we expect both sides to be remediated in the first half of 2020. So that's really a bit of the background here. Just an additional information is that within the two sites, we have the same quality management systems, and the businesses are linked with hardware and disposable products. I also want to remind everybody that we took a business decision in November of last year to transfer production in Mahwah and Fairfield to Wayne in New Jersey, and that this transfer is still planned to go ahead. There is no change in this regard, and the transfer is taking place during 2020 and 2021.
That's a quick overview of where we stand, and with that, we open up for questions. Thank you.
Okay, ladies and gentlemen, if you have a question, please, can you press zero and then one on your phone keypad now in order to enter the queue? And then after I announce you, just ask that question. And if you find that question has been answered before it's your turn to speak, just press zero and then two to cancel. And there'll be a brief pause while the questions are being registered. We first go to the line of Michael Jungling at Morgan Stanley. Please go ahead. Your line is now open.
Hi, good afternoon. I have one question in relation to the pipeline for Datascope. How is this news going to be impacting your ability to launch new products, with the communication here by the FDA? Are you now limited to only selling existing products, or can you also launch products? Thank you.
Yeah, thank you. Thank you, Michael. No, we have a pipeline of innovations related to our intra-aortic balloon pump business, and we don't see any delays in this at the moment. I think we've assigned adequate resources to work with the remediation already since the fourth quarter of 2017. So today, I don't see any material impact on the innovation and new products for this part of the business.
Mm-hmm. So, to clarify, the FDA Warning Letter does not prohibit you from getting approval for new products from those facilities?
No, we have no such information, at least today. There's nothing we're aware of in that regard.
Okay, thank you.
Thank you.
We are now over to the line of Scott Bardo at Berenberg. Please go ahead, Scott. Your line is now open.
Yeah, thanks very much for taking the questions. So, first question, please, does this additional warning letter related to this product category increase the likelihood in your mind of getting a Consent Decree extended for these facilities? Perhaps you could talk a little bit about the risks around that, and what the status of these warning letters or this escalation means as part of the transfer of production to Wayne, which already has a Consent Decree . I'd also like, more generally speaking, to talk a little bit about your own remediation efforts. You've clearly been investing a lot of money in remediation for the last many years, and these issues are popping up more recently. You said you noticed some of these observations before your warning letters.
Can you share with us whether there are any other observations that you have made across your other manufacturing facilities, which could also lead to further, more stringent action from the FDA? Thank you.
Mm-hmm. Yeah, thanks, Scott. I really cannot speculate in whether this will have any impact on the Consent Decree . As such, no additional information on that today. And when it comes to the move to Wayne as well, we don't see at this stage that it has an impact on our plans. On the i f anything, it should be a positive impact to get this move moved on. So, no real news there either.
When we talk about the history of remediation, I think it's important to distinguish between the time before the ring-fencing case at the end of 2016, and where we are now. The assumption at the end of 2016 was that all other sites in the previous Medical Systems Business area had been remediated, so they were not looked into at that point in time. We could see it was Joacim Lindoff, my predecessor at the time, and myself, before I joined, who could see that the remediation wasn't progressing according to plan in some of the other sites and sites in the wake of the organizational changes that were implemented during 2015 and 2016.
So therefore, we decided to do the ring-fencing structure to really make sure that the proper focus was there. As part of that, we learned in the second quarter of 2017 that the Hechingen remediation activities had gone off in a little bit the wrong direction. They hadn't taken a holistic approach to remediation, so we needed to do that reset. With that discovery, we realized that there may have been issues with some of the previous remediation that was taking place in 2014 with the first Warning Letter from FDA.
During those internal audits, we, we found, the issues we're now talking about in, in Mahwah and Fairfield , but we have not found anything anywhere else that leads us to, to believe that there are concerns from, from FDA in that regard. We, we have no such information or reason to believe that today.
Understood. And perhaps just one follow-up, but specifically on this product category, can you remind us actually as to your business performance in intra-aortic balloon pumps? Has this been a declining or stable business for you, and have your revenues been any way impacted by the remediation activities that you've been conducting over the last year or two?
Yeah. No, it's, it, it's a stable business. I, I would say it's really slow growth, if, if anything, but it's been stable over the last last few years. And, with the, the, the resources that we've made for remediation, these are resources that we've added on top of the structure that we had before. So, it hasn't had any impact on, on our capacity to supply, and we, we don't have any such constraints today with either.
Okay. Thanks very much, for taking the question.
Thank you.
Okay. We now go to the line of Annette Lykke at Handelsbanken. Please go ahead. Your line is now open.
Yes. So my question is more related to you have previously sort of communicated that you expected the remediation process to be finalized by end of the financial year, 2018. What are the problems and where is the problems and how should we see the s hould we expect delays in this remediation process for other sites than just these two? And can you please update us on Hechingen as well?
Mm-hmm. Yeah. No, I think the, what we've said is that the Consent Decree sites, they are the two American ones, and they are remediated already, so that work is done. It's behind us. And, and when it comes to, to Hechingen, the quality management system is remediated, but not the, the product as such. So we have another couple of years to, to work through, through this. When, when it comes to the, say, resources used for, for the Fairfield and Mahwah sites, and, these are things, activities that have been in place for, for over a year already. So it's, it's, it's cost, as you already see in, in our, admin costs, mostly, I would say, in the, in the profit and loss statement.
So it is ongoing work, and I think the warning letters we received, now, they are a confirmation of what we have known ourselves and have been working on for quite a while. So from that perspective, there's not a huge change to the work and the activities that are going on. Of course, we need to have a continued dialogue with the FDA to see if there are additional things, but we have no such information today. The information in the warning letters, they relate to things that we were already working on.
Okay. Do you see this as a part of just business as usual, or should we expect this kind, because you have such a large number of sites and diverse number of products. So this is what we should expect also looking forward to have these calls, recalls, warning letters, et cetera, or do you see this to change materially looking forward?
No, I don't think one should get used to this some kind of new reality. I mean, this is, again, these are things that have popped up in the inadequate remediation of the sites in 2014, Mahwah and Fairfield specifically. But as I said, we have gone through all our other sites with internal audit teams and also had third-party auditors look at this, and we have today no reason to believe that there are any further issues. But of course, the nature of the business is while you will, of course, you will have product recalls. I think that's probably unavoidable given the complexity of the environment that we operate in and so on. But it's of course disappointing to have warning letters for these two sites.
Now, but we can only methodically work through this, but we're not aware of anything else in addition to this.
Yeah. I'm sorry to be so frank, but it, it's hard for me to figure out if you just think this is business as usual, or if you are, sort of, I would say, unhappy or happy with the situation.
No. Okay. Yeah, okay. Yeah, okay. Well, let me be clear then. It's not business as usual. We're unhappy about this, and I don't think it's acceptable to be in this position with these sites. That's why we immediately, when we discovered that we had shortcomings, we started remediation in the end of 2017. So it's absolutely should not be seen as business as usual. We take it very seriously, and it's disappointing that we are still in this state. But we're w e've been aware of it for a while and working through it, but it should not be seen as business as usual. Absolutely not.
Okay. Thank you.
We are now back to the line of Scott Bardo at Berenberg. Please go ahead, Scott, your line is up.
Yeah, thanks for the follow-up, actually. So, Mattias, does Getinge have any other 483 observations across your manufacturing footprints that we're not aware of today? Obviously, we know about the 3 Consent Decree manufacturing facilities and now the 2 warning letters that you have. Are there any other 483 observations around in this corrective and preventative procedures and medical device reporting that could lead, if you like, to further scrutiny from the regulator?
We're not aware or can't see anything like that at the moment, then if there were anything that we were aware of the material impact, we would communicate that as well. So let's understand.
Thank you. And just lastly, again, on this, in this product category, can you relay any conversations you've had with the FDA or, or perhaps, comment a little bit about the importance of these devices in the market? I'm mindful of the fact that the FDA had a Dear Doctor Letter for Abiomed more recently about the survival of some of the post-implantation survival data with their products. And I'm just wondering, both categories serve similar customers, and I'm just wondering how, you know, any communication about the continuity of supply in the market from the FDA. Can you talk to that a little bit?
Yeah. I mean, we have no such information or communication. I mean, they are very different products, and we have nothing. There's nothing additional I can say. There's no such dialogue with the FDA or any patient-related impact on these products.
Okay. Thanks very much.
Once again, if anyone else has any further questions at this stage, please do use this opportunity and press zero and then one on your phone keypad now. Okay, we go to the line, Christopher Liljeblad at Carnegie. Please go ahead. Your line is now up.
Yeah, hi. Thank you. Do you think it's a fair assumption, though, you're still y ou're trying to downplay the risk here, but doesn't, do you think it's a fair assumption to assume there's a higher risk now of these two sites being included in the Consent Decree, given it's not only one, it's two of them? And related to that, timing-wise, when do you expect to have a better picture what the next step from FDA will be? Thank you.
As I said in one of the initial questions, yeah, I really cannot speculate on this. I think that I'm not very, very crucial on the relation with the Consent Decree on these sites. I really don't know. I have no such information from FDA. I mean, we would have to w e've asked for follow-up meetings to understand more in detail exactly the feedback in the warning letters, but we have no confirmation of the timing of that as of today.
Can you say anything about the dialogue with FDA since you received the first Datascope Warning Letter?
Yeah, it's been really very limited dialogue. It is, yeah, we've not had much feedback since the audit exemption and Warning Letter and the response from the response. So that's, yeah, not been a lot of communication actually.
Okay. Thank you.
Okay. As there are no further questions in the queue, Mattias, pass it back to you for any closing comments at this stage.
Yeah, nothing else we need to add from my point. I think we've summarized the situation rather well. So once again, thanks for dialing in today.
This now concludes.