- Medical device maker Stryker agreed to pay $7.8 million to settle charges it violated the Foreign Corrupt Practices Act, its second FCPA settlement in five years, the Securities and Exchange Commission said.
- The SEC said Stryker's internal accounting controls were insufficient to detect the risk of improper payments for product sales in India, China and Kuwait. In addition, Stryker's India subsidiary failed to maintain complete and accurate books and records, according to the securities regulator. Stryker neither admitted to nor denied the SEC’s findings.
- Separately, Stryker announced the acquisition of HyperBranch Medical Technology, a maker of polymers, hydrogels and sealants, for $220 million in cash.
It has been a busy couple of days for Stryker, which put behind it a major SEC investigation while absorbing its fifth acquisition of the year.
In settling the SEC investigation, Kalamazoo, Mich.-based Stryker consented to an order requiring the company to cease and desist from violations of the FCPA's books and records and internal accounting controls provisions. Stryker now must retain an independent compliance consultant to review its internal controls, recordkeeping and anti-corruption policies and procedures covering distributors and other third parties that sell on its behalf.
"Stryker's failures to implement sufficient internal accounting controls and keep accurate books and records are unacceptable, especially as this is not the first time the company has been charged for these types of violations," Marc Berger, director of the SEC’s New York office, said in a statement. "The penalty ordered along with the imposition of a compliance consultant are appropriate and necessary."
In October 2013, Stryker agreed to pay $3.5 million to settled charges of FCPA violations plus more than $7.5 million in disgorgement of ill-gotten gains and more than $2.2 million in interest.
On a brighter note for the company, Stryker announced the latest in a series of acquisitions as it adheres to its strategy of snapping up small- and mid-sized companies that have helped accelerate sales growth. Privately held HyperBranch's core products, the Adherus AutoSpray Dural Sealant and Adherus AutoSpray ET Dural Sealant, are used by neurosurgeons in cranial and spinal procedures.
The Adherus AutoSpray Dural Sealant competes against Integra LifeSciences as the only two such FDA-approved products on the market. The Adherus hydrogel is indicated for use as an adjunct to standard methods of dural repair to aid in creating a watertight closure of the dura, the outermost of the three membranes covering the brain and spinal cord.
Stryker said the Adherus product will fit in well in its craniomaxillofacial division. The transaction is expected to have no impact on net earnings in 2018.
Last month, Stryker announced a deal to acquire surgical lighting company Invuity for $190 million, on the heels of buying spine device maker K2M for $1.4 billion. In June, Stryker said it would buy SafeAir AG, a Swiss company developing surgical smoke evacuation solutions, and earlier this year finalized the purchase of Entellus Medical, a maker of minimally invasive ear, nose and throat treatments.