Royal Philips (NYSE: PHG) announced this week that it is shuttering its Respironics business’ Pittsburgh headquarters and slashing hundreds of manufacturing jobs in the region.
In a statement shared with local media, the Dutch medtech giant said it will exit its headquarters building in Bakery Square in Pittsburgh, moving 500 jobs to nearby facilities in the region from the end of 2024. At the same time, the company will mostly end manufacturing at its Murrysville and New Kensington plants, transferring the work to an undisclosed contract manufacturer. (Update: That contract manufacturer has been identified and will move the work to Thailand.)
The moves will result in the loss of 300 jobs, with roughly 900 Respironics jobs left in western Pennsylvania.
The downsizing comes as Philips seeks to resolve what is now a three-year-old recall involving 5.5 million recalled CPAPs and other devices. The recall involved sound abatement foam that could potentially degrade and get into the airways. (MassDevice has a full timeline of the recall.)
In January, Philips discontinued the U.S. sales of several respiratory device product lines as it neared completion of a consent decree with the U.S. Department of Justice and FDA. Under the deal finalized in April, Philips agreed not to sell or distribute any new respiratory devices as it worked through the terms of the agreement. Analysts had predicted that it would take until at least next year before Philips could sell respiratory devices in the U.S. without restrictions.
In a statement shared with MassDevice today, Philips said: “Western Pennsylvania will remain a strong development hub for the Sleep & Respiratory Care business. These changes will have no impact on Philips Respironics’ commitment to complying with the consent decree and will ensure it can provide patients with the highest quality products most efficiently and competitively.”
The Respironics business pioneered the creation of CPAP machines to treat sleep apnea, selling its first devices in the 1980s. Philips closed its $5 billion acquisition of the company in 2008. In an interview last year with the Pittsburgh Post-Gazette, Respironics founder Gerald McGinnis expressed disappointment and embarrassment over what happened to the brand since Philips took over.
This post was originally published on June 20, 2024 and updated in October 2024 with more information about the outsourcing deal.
