Royal Philips (NYSE:PHG) announced today that it has reached an agreement with the U.S. government to double its ventilator production by May in order to better support the fight against the coronavirus pandemic.
The Amsterdam-based company also plans to quadruple production by the third quarter in order to deliver tens of thousands of ventilators to the U.S. and other countries wrestling with COVID-19.
The U.S. government under the Defense Production Act is paying Philips $646.7 million to deliver 2,500 ventilators to the Strategic National Stockpile by the end of May 2020, with a total 43,000 ventilators delivered by the end of the year, according to a U.S. Department of Health and Human Services news release.
President Donald Trump on April 2 directed HHS Secretary Alex Azar to invoke the DPA with regard to Philips and five other companies. HHS says the other five firms will receive rated contracts in the coming week. Trump in late March ordered General Motors and Ventec Life Systems to produce ventilators under the DPA.
“The DPA is allowing the federal government to work with manufacturers, such as Philips, to accelerate production of ventilators and ensure that they go where they’re needed most. HHS will continue awarding contracts to companies for which it has invoked the DPA for ventilator production, while we explore every possible avenue to get life-saving supplies to the frontlines of this war on the virus,” said HHS Secretary Alex Azar
President Donald Trump boasted during a White House Press briefing today: “We expect to send quite a few ventilators to other countries after we’re finished.”
Philips said the federal government will help it gain access to critical materials and components and expedite logistics and regulatory approvals so that it can rapidly increase the production of ventilators.
“We are actively collaborating with the U.S. government to help save lives in the U.S. and across the globe,” Philips CEO Frans van Houten said in a news release.
“There is an unprecedented global demand for medical equipment to help diagnose and treat patients with COVID-19,” van Houten said. “We welcome the support of the U.S. government in our efforts to aggressively increase the production of hospital ventilators. We believe in fair allocation of scarce medical equipment to those who need it the most, and we are ramping up to deliver 43,000 units to the most critical regions in the U.S. in the coming weeks and months through December 2020.”
Trade group AdvaMed recently reported that Philips — as well as other ventilator-producing companies including Draeger, GE Healthcare, Hillrom, Medtronic, ResMed and Vyaire Medical — are adding entire new manufacturing lines, repurposing existing manufacturing lines for less essential equipment, training and reorienting engineers, and adding new employees to meet the demand.