Philips chief exits in wake of fallout from medical device recall

The chief executive of Dutch company Philips has left the business in the wake of a costly recall of faulty medical devices that led to a profit warning.

The health technology company said on Tuesday that Frans van Houten would be replaced by Roy Jakobs, head of its connected care division, in mid-October. Van Houten’s third term as chief executive was scheduled to end in April next year.

The Amsterdam-based group said the supervisory board and van Houten “have agreed that with the end of his third term in sight, the time is right for the change in leadership”.

Shares in Philips, which were trading above €41 late last year, rose 4.2 per cent to €20 in midday trading on Tuesday.

Van Houten’s sudden departure comes after the company had to recall or repair 5.2mn devices in June last year. Philips had found a faulty component in the devices, which were primarily used to assist the breathing of patients suffering from sleep apnoea.

The Dutch group subsequently issued a profit warning in January and lowered its full-year guidance in July.

Philips said “substantial progress has been made” since Jakobs took on responsibility for a voluntary product recall, which was extended to include older devices.

The company said Jakobs had been “successful in turning around businesses in customer-focused growth organisations”.

Van Houten, who led the company for more than 10 years, will stay on as an adviser until the end of April.

Hassan Al-Wakeel, an analyst at Barclays, said: “Roy’s background at Philips was as chief business leader [of personal health] as well as market leader for the broader Middle East business and we would also view his more recent involvement in the recall as a positive allowing for continuity here.”

Jakobs joined Philips in 2010 and has held various positions, starting as chief marketing and strategy officer for Philips Lighting. He previously worked at energy supermajor Shell where he undertook a number of management roles across Europe.

After Shell he joined Elsevier, the publisher of The Lancet and Gray’s Anatomy along with electronic tools for scientists.

Royal Philips said the main priorities for its new chief executive include deepening “the quality and patient safety capability across the company”.

Jakobs will also seek to “lead Philips to resume its profitable growth trajectory by addressing current headwinds, including strengthening supply chain resilience”.