RECALL SPOTLIGHT EUROPE: Q3 2019 - Stericycle Expert Solutions
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Stericycle Expert Solutions RECALL SPOTLIGHT EUROPE: Q3 2019
EXECUTIVE SUMMARY Stericycle Expert Solution’s Q3 Spotlight report arrives in the midst of one of the biggest constitutional headaches in Europe, with the question of how the UK will leave the EU one that may – or indeed may not – be answered by the end of this month. And while uncertainty remains over the future of that relationship, this quarter’s Spotlight can help us chart a path ahead with recalls over the last period providing perhaps one of the clearest indications of what the future holds. While it may come as little surprise for those of us constantly having to update or renew our phones, the key trend to have emerged across all categories in Q3 is that of software failures. From motoring to medical devices, we are seeing more and more products being withdrawn from the market due to problems with quality and reliability. With the launch of the 5G mobile network also taking place this quarter, bringing with it a plethora of always-connected in-home devices and smart-nav applications, it is likely that this will be a growing problem in Q4 and throughout 2020. 2
3
AUTOMOTIVE SPOTLIGHT - PAGE 6 FOOD AND BEVERAGE SPOTLIGHT - PAGE 16
For the first time this year, Italy has topped the list for the highest volume of recall
Germany remains at the top the list of notifying countries for the third quarter of the
notifications, accounting for 117 of 968 total notifications.
year, however after a spike in Q2, notices have returned to a lower level. Looking across
the European automotive industry, recall notices have risen by 21% from Q2 and – as
A spike in recalls of fish and fish products reflects the growing seafood market, however
to be expected – passenger cars are the most recalled vehicle in the category although
nuts (144) and fruits and vegetables (109) are still the most recalled products. Poultry
we have seen an increase in the recalls of vans.
issues, which we flagged as one to watch last quarter, have dropped down in Q3 to 70
compared to 104 in Q2 however it will be interesting to see how the poultry market
Broadly speaking, advancing technology has seen some interesting trends come into
changes post Brexit. Withdrawal from the market (130) remained the most common
play over the past few months, with new software and ‘smart’ devices improving user
action taken against recalled products. In contrast, there were fewer instances of product
experience but leaving vehicles vulnerable to defects and hacking.
destruction (82).
TOYS SPOTLIGHT - PAGE 26 ELECTRONICS SPOTLIGHT - PAGE 36
Our Q3 analysis revealed a rise in recalls over the past three months – although still The third quarter of the year saw recalls rise by 51% in the electronics industry.
lower than Q1’s post-Christmas spike. Unexpectedly, Hungary placed a large number New entrants to the recalled product list included: hot plates, insect killers and LED
of recall notifications – reaching the top of the table alongside Poland. Plastic dolls hydroponics lights, however, USB chargers continue to top the list of electric products
remained the most recalled item with the majority due to chemical risks – hazards of this recalled. Electric shock remains the predominant reason for recall in the electronics
nature rose by 95% between Q2 and Q3. market (34 notifications placed in Q3 alone).
Toy slime continues to appear on recall alert lists – with 52 recalls placed so far in 2019, As was the case across most categories, rising risks from software defects and
compared to just 15 in 2018. Although there’s greater awareness of the potential risks of vulnerabilities dominated wider trends with the potential to impact manufacturers. In this
harmful chemicals, increasing numbers of counterfeiters and scammers creating genuine case risks were presented by ‘fake’ chargers that threatened to compromise user safety.
looking products on e-commerce platforms is making it tricky to navigate.
CLOTHING SPOTLIGHT - PAGE 46 MEDICAL DEVICES SPOTLIGHT - PAGE 56
Q3 saw a lot of movement in countries placing alerts of medical device recalls,
The clothing category placed 42 recalls in Q3, with Cyprus notifying the most often (24),
particularly Denmark and Germany. Italy, which topped the list in the previous review
followed by Germany (8), Romania (6) and Bulgaria (4). While recalls are up on the same
period, saw alerts fall 43% in Q3. Quality issues are again the most common reason for
period of 2018, recalls from Q2 are significantly lower.
recalls, with 257 alerts of this nature placed. However, on the whole, recalls of medical
devices have gradually decreased.
The vast majority of recalls were for children’s clothing, particularly dresses, and much
the same as in Q2, risk of injury (25) was the most common recall reason, followed by
Software is driving fantastic advancements in terms of patient monitoring and care, but
chemical risk. It was indeed chemical risk that dominated headlines over the past three
also exposes devices to risks of hacking and software errors. New regulations due to
months, with one major retailer recalling items due to dangerous levels of lead being
come into effect in Europe in 2020 that will help protect against security risks posed by
detected, however swift recall action is encouraging, with retailers taking ownership of
advancing technology.
the recall process.
PHARMACEUTICALS SPOTLIGHT - PAGE 66 CONCLUSIONS - PAGE 76
Looking at recall data for Q3 2019, there were 99 pharmaceutical recalls from This Spotlight reinforces the fact that one thing continues to dominate all recall
July until the end of September, down from 122 notifications in Q2. One of the categories. From medical devices to automotive and household appliances, we are
largest recalls in Q3 was for products containing Ranitidine, a drug used to treat completely reliant on technology. And with this reliance comes great risk. As software
indigestion, heartburn and acid reflux. In the last three months, 20 products and technology advances at pace, big industries are finding that they are weathering
originating from France were recalled. Second to France in terms of volume was storms that were previously unknown to them.
Portugal with 17 recalls – down from 22 in Q2 and 39 in Q1.
Hacking, cybercrime and faulty smart devices are making businesses vulnerable.
As we approach the Brexit deadline date, we can expect companies to scale back Never has there been a better time to put measures in place to protect customers and
their R&D activity as uncertainty dominates the market and backlogs present the brands. Like it or not, we are all operating in a world where technology is fundamental
likely threat of product expiration. to progression.
AUTOMOTIVE SPOTLIGHT
Q3 2019 OVERVIEW The third quarter of the year continued in a similar vein to the previous two, with Germany again topping the list of notifying countries with 93 notifications placed in Q3 – accounting to almost 70% of total notices across Europe. However, figures are down after a spike in Q2 (112) and Germany has returned to similar levels as the beginning of 2019. Interestingly, the number of cars produced in the USA which were subject to recall has risen to double the figure in Q1, from six to 12 instances, placing the US third behind Germany (56) and France (21). More broadly, recall notices in the automotive industry have risen. Across the whole of Europe there were 136 vehicle recalls submitted – up by 21% from Q2 (112). There are a number of wider factors at play here, but technology is the prevailing one for manufacturers to be aware of. Car recalls are rising as the industry becomes more high-tech, with more components increasing the risk of defective products. Technology is making vehicles vulnerable to security breaches and hacking, as well as tougher regulation processes putting pressure on manufacturers. To help combat this, some manufacturers are investing in what is known as smart factories, using AI to detect potential defaults before cars leave the premises. This technology is also being implemented within cars, as smart devices increasingly expand a vehicle’s capabilities, assisting everything from interior ambience to steering. However, increasingly tech heavy vehicles might mean more chance of defective elements. 8
9
DEEP DIVE
As highlighted in previous automotive Spotlights, the increasing amount of technology built into new car models is
leaving them vulnerable to defects.
To help protect consumers, regulators are cracking down on manufacturers BMW and Audi. However, high upfront investment is keeping small and
and as such we can expect the amount of recalls to rise. medium sized enterprises at bay, which may restrict their potential to
compete and put them at higher risk of recall instance.
To help negate any potential recall instances, a growing number of
automotive producers are investing in ‘smart factories’ – so-called Another trend having an impact on the automotive industry is the
Industry 4.0. According to a recent report by Capgemini, the automotive rise of smart devices. We’ve seen these across the board, from allergy
sector is the most enthusiastic industry in setting these up, making large detectors in the food & drink industry to trackable health monitoring in
investments and setting higher targets for its digital manufacturing medical devices. For automotive, recent examples include Mercedes-Benz
operations than any other sector. partnering with Garmin to launch a smartwatch that communicates with
a car’s artificial-intelligence driven dashboard, using the information to
Figures show 49% of manufacturers have already invested more than adapt the car’s interior ambiance.
$250m in smart factories (MASCHINENMARKT INTERNATIONAL 2018) and
by the end of 2022, automotive manufacturers expect that 24% of their Another example came from Jaguar Land Rover, which developed a new
plants will be smart factories. sensory steering wheel that uses heat to tell drivers when to turn left or
right. The thermal changes could also be used to warn of approaching
Although using manual modelling to predict outcomes based on past junctions and roads with poor visibility.
events is not new, manufacturers are increasingly able to harness machine
learning platforms which not only learn from past failure patterns, but Tesla has also updated its cars with a Smart Summon feature that allows
detect issues that would otherwise go unnoticed. drivers to call their Tesla to come to them. When tested in an empty
parking lot or a private driveway, it works well, but not so much in busier
This technology revolution has incredible potential to transform the recall areas. It’s not hard to think where this might go wrong.
market, removing any risk before the car has left the production line. This
type of technology also has potential to be deployed into the field, using The above example highlights that this type of technology is still in its
predictive maintenance on vehicle assessments to ensure timely and need- infancy and the continuous advancement in vehicle technology is blurring
based upkeep. the lines between the traditional automotive industry and the electronics/
tech sector – making it important for established manufacturers to work
So what can be expected over the next few months? We’ve already seen closely with tech companies to ensure vehicles and devices are rigorously
well-known car marques pledge investments in smart factories, including tested ahead of going to market.
1011
SAFETY GATE INSIGHT For the third quarter in a row, Germany was top of the list of notifying countries, with 93 notifications placed. In what has been an unsurprising three months, and similar to what we have seen in previous quarters, after Germany the largest numbers of notifications came from France (12), Portugal (11) and the UK (6). The third quarter of the year saw a rise in the number of cars recalled that were produced in the USA – doubling from 6 in Q1 to 12 in Q3. The same period also saw double the amount of pickup trucks recalled (8), although figures have remain relatively low in comparison to passenger cars (88). Overall, the main reason for recall in the automotive market in Q3 was passenger safety, and the biggest risk was from airbags. Airbags have been around since the 1970s and are mandatory in every vehicle. When they were first launched, car manufacturers recommended an inspection of them every 10 years. However, advances in airbag module technology mean long-term, functional reliability of the airbags should be ensured. While this is of some comfort, the consistent recall of cars with airbag issues can cause concern, and is something the wider industry needs to pay close attention to. Auto recalls have been on the rise in recent years and the recent figures have highlighted that this is unlikely to change anytime soon. Manufacturers must shift priority from firefighting to prevention across all functional processes with proper quality management solutions – like the solutions made available through smart factories. Quality should be at the core of all functions, with clearly defined targets and key quality indicators. 12
NO. OF RECALLS BY COUNTRY OF PRODUCTION NO. OF RECALLS BY COUNTRY OF NOTIFICATION NUMBER OF AUTOMOTIVE RECALLS
100
Thailand 90
150
Spain 80
Republic of Korea 70
United Kingdom 60 100
China 50
Italy 40
50
Japan 30
United States 20
0
France 10
18
18
18
19
19
19
20
20
20
20
20
20
2
3
4
1
2
Germany
3
0
Q
Q
Q
Q
Q
Q
y
e
l
ia
d
ly
m
ga
an
nc
m
n
g
Ita
an
u
la
0
10
20
30
40
50
60
ur
tu
do
gi
a
rm
m
Po
Fr
bo
l
r
Be
ng
Po
Ro
Ge
m
Ki
xe
d
Lu
ite
Un
13ANALYSIS The lag between consumer technology innovation and implementation in the latest marques is a terrific indicator as to where the sector is heading; and just as the arrival of highly efficient powerful LED projectors brought about the inclusion of heads-up displays in more vehicles, the increasing investment in IOT integration and virtualisation is a perfect indicator as to where the industry might be headed. Some integration has already been seen, with Tesla, Nissan and BMW among early adopters of the app-driven car interface, albeit mostly for gimmicky reasons. However, the increasing electrification of the motor vehicle fleet means even greater opportunity for cross device interaction as manufacturers try to compensate for lack of range and charging time for a greater in-car experience. As such, the idea that people will be able to use their mobile phone as the key for their car is one that doesn’t appear to be that far away, while faster 5G networks and cloud computing opens the door for heads-up satellite navigation systems, with front-facing cameras to track your position on the road and highlight both directions and possible threats not too far off in the distance. As this report has already highlighted, the risk of hacks has already increased over recent times. However, the proliferation of IOT within a vehicle makes this a greater risk than ever before. In fact, there were six recalls for vehicles linked to software failings in 2019, five of which were in the last quarter. Software wasn’t listed as a reason for recall in the last two quarters of 2018. As such, Stericycle Expert Solutions predicts that over the coming months there will be a sharp rise in the number of software recalls in comparison to mechanical recalls. With electric cars featuring fewer moving parts than their petrol and diesel equivalents, this situation will be exacerbated in the years ahead. 14
15
FOOD & BEVERAGE SPOTLIGHT
Q3 2019 OVERVIEW Food, glorious food. We love it, need it and talk about it a lot. And apparently we Europeans love Italian cuisine most of all. In 2018 YouGov conducted a survey of seven European countries which included the UK, Germany, Denmark, France, Sweden, Finland and Norway, finding that Italian dishes were the most popular. For the first time this year, Italy has topped the list for the highest volume of recall notifications, accounting for 117 of 968 total notifications. Thirty-seven of these came under the fish and fish products category – a third of the 107 recalls for the quarter. This correlates with the growing demand for fish and seafood across Europe, as countries within the EU continue to rely on seafood imports in response to increasing concern about the carbon footprint of other meats such as beef, pork and lamb. According to the WWF, on 9 July Europe had used up all of its domestic fish resources for 2019 and had to begin importing it from across the world. Countries with the highest dependence on seafood products from foreign waters include Portugal, Spain, Lithuania, France and Sweden. Nuts (144) and fruits and vegetables (109) are still the most recalled products, ahead of fish and fish products (107). It’s the spike in fish recalls that we want to explore further to discover the root cause and how this fares in relation to poultry recalls, which have dropped down in Q3 to 70 compared to 104 in Q2 – which in itself was a significant spike from just 57 Q1. Is there a wider protein issue at play or is it down to contamination? 18
19
DEEP DIVE
Looking more closely at the reasons why notifications were issued by Italy for fish and fish products, a total of 20 were
cited as containing mercury – all ranked as a serious risk to consumers.
Putting this into context, mercury exposure at high levels can harm all In contrast, in Q2 this year we documented the ongoing issue of
of the major human internal organs. It is believed that increased levels European sanctions of Brazilian poultry due to salmonella contamination.
in the bloodstream of unborn babies and young children may harm the Interestingly, the volume of poultry recalls and notifications dropped to
development of the nervous system. only 70 this quarter, down from 104 in Q2.
Fish and shellfish are a Mediterranean diet staple food. They contain high- The EU has been running a salmonella reduction scheme for more than
quality protein and other essential nutrients such as omega-3 fatty acids. 10 years and the UK in particular has a low tolerance for salmonella rates
The risk posed by mercury in fish depends on both the volumes of mercury which range from 1.2% to 1.5%, as stipulated by the Foods Standards
within the fish and of course the amount of fish eaten. Agency (FSA). As many as 370 consignments of Brazilian chicken tested
positive for salmonella since April 2017. So why are we seeing a drop in
In the last 500 years, human activities have caused the release of 1.5million European notifications?
tonnes of mercury into the environment and it can easily navigate its way
into our waterways and travel for up to six months. In a recent article Of the 43 notifications which cited salmonella contamination as the
published by Physics World, one of the most dangerous pathways to reason for the recall, only three listed Brazil as “countries concerned”. The
mercury poisoning is for people, is eating large fish like tuna because notifying countries were the United Kingdom (2) and the Netherlands (1).
they concentrate the methylmercury they consume from smaller fish and The sanctions are still in place. It will be interesting to see how the poultry
shellfish. market changes post Brexit. Will the United States become the UK’s largest
poultry supplier? We will find out soon.
And while we do not believe there is a need for anyone to panic over this,
it is our thinking that countries like Italy will continue to monitor and reject
consignments of fish in the coming months as they become more reliant
on imports from across the world to meet the unrelenting demand for fresh
fish.
2021
RASFF INSIGHT
In addition to the rise in seafood recalls, feed materials went up from 52 in
Q2 to 73 in Q3, placing the category in the top four most recalled produce
items. There was also a sharp rise in the volume of recalls that cited “not
authorised” under action taken. This featured 97 times during Q3, up from 85
in Q2.
Withdrawal from the market (130) remained the most common action taken
against recalled products. In contrast, there were fewer instances of product
destruction (82).
ACTION TAKEN Q3 2019
Withdrawal from the market 130
Recall from consumers 104
Import not authorized 97
Re-dispatch 91
Destruction 82
Official detention 57
Informing recipient(s) 46
Informing authorities 38
Public warning - press release 37
Physical/chemical treatment 35
22NUMBER OF FOOD RECALLS NUMBER OF RECALLS BY FOOD CATEGORY
1060
Cereals and bakery products
1040 Herbs and spices
Food contact materials
1020
Dietetic foods, food supplements, fortified foods
1000
Meat and meat products (other than poultry)
980
Poultry meat and poultry meat products
960 Feed materials
Fish and fish products
940
Fruits and vegetables
920
Nuts, nut products and seeds
19
19
19
18
20
20
20
20
1
2
3
4
Q
Q
Q
Q
0
20
40
60
80
0
0
0
0
10
12
14
16
NUMBER OF RECALLS BY COUNTRY OF NOTIFICATION
140
120
100
80
60
40
20
0
ly
y
UK
ce
s
n
d
m
ce
k
nd
an
ar
ai
n
Ita
iu
an
ee
la
Sp
m
rm
rla
lg
Po
Gr
Fr
en 23
Be
he
Ge
D
et
NANALYSIS Our diets are changing, with more and more people favouring so-called ‘planet-friendly’ foods such as vegetables, ‘clean’ meats and low-impact protein from chicken and fish. Despite the increase in recalls due to mercury poisoning, it is encouraging to see that the number of recalls over the year is on track to be lower than in 2018 as a whole, with 233 fish or fish products recalled so far this year compared to 330 for the whole of last year. The poultry situation, however, is not quite as rosy, with 231 recalls in the category for the year so far, compared to 265 for the whole of 2018. With consumer attitudes likely to favour more fish and poultry in the year ahead – we anticipate a steady growth in recalls in this area. Meanwhile, the introduction of ‘clean’ meats to the marketplace is a trend to watch for in Q4 and 2020, with the likes of the Beyond Burger and Impossible Burger likely to make an impact over the coming months, with fast food chains among those to adopt the veg-based burgers to make an effort to react to increasing consumer demand. However, health claims linked to these products are already being challenged – something that’s sure to see regulators cast a close eye over the content and quality of the products. 24
25
TOY SPOTLIGHT
Q3 2019 OVERVIEW It was a quarter of surprises for toy recalls, with Hungary and the UK submitting far more alerts than the previous half of the year. And while the first six months of 2019 looked slightly more positive for recalls of plastic dolls, in Q3 the number of recalls of this product is on the rise again. Looking at broader trends with the potential to impact toy recalls, the dangers presented by chemical contamination remain a big risk to consumers, with notices placed on everything from toy slime to plastic dolls – both including chemicals harmful to not only children, but the wider environment. As we approach the festive season and the must-have toys for 2019 are announced, it’s worth considering any potential red flags for manufacturers and consumers to consider, and to see if learnings from last year have been put into effect. January saw a surge of post-Christmas recalls of some of the most popular gifts, including hoverboards and toy slime, so it will be interesting to see whether manufacturers have taken appropriate action. 28
29
DEEP DIVE
In Europe, children’s toys must pass rigorous health and safety checks before being allowed on the market, and while
the system does generally protect young people, some products slip through the net as supply chains are globalised
and online marketplaces make it hard for consumers to know whether an item is genuine.
Ensuring a child’s safety is at the forefront of every parent’s mind. With only a few months until Christmas, this year’s must-have toy lists are
Parents should not need to wonder whether toys are safe for their child. being published, with the products predicted by leading retailer Smyths
Unfortunately, seemingly harmless toys and other children’s products can Toy Store including Barbie, NERF, Paw Patrol and LEGO in addition to some
pose serious health risks. brand new toys such as figurines from some of the year’s hit films.
The toy industry has been plagued with risks posed by the presence of With toys including everything from plastic dolls to plush animals and
phthalates, a harmful chemical present to make plastics more flexible, puzzle sets, each year sees a number of counterfeit copycat products
durable, and soft, and with the potential to impact a child’s reproductive become available – especially when official products have sold out. These
system and liver if ingested. products don’t follow regulations but are still able to be sold on third-
party online marketplaces that don’t have testing requirements.
The increasing chemical risk can be somewhat explained by the resurgence As noted by Inc., “this has in turn spawned a vast ecosystem of
in popularity of toy slime, with many products tested found to contain the counterfeiters, scammers, and knockoffs, an ecosystem that poses
chemical boron. However, the fact that the EU tests products for boron can an existential threat to businesses that lack the financial resources or
be of some comfort to consumers, with countries including the US having manpower to do full-time IP enforcement”.
no such testing measures in place. One example concerning pink ‘Unicorn
Poo’ resulted in the withdrawal of all the products from sale, not just the The marketplace is arguably one of the most active and perhaps the
affected batch. most difficult for parents to keep a close eye on, while the sheer number
and variety of products makes it nigh on impossible to regulate every
We predicted earlier in the year that toy slime would be one product that single product being sold online. What manufactures can do is stress the
we expected to see more recalls from as consumers become aware of the importance of buying from regulated sellers to consumers, and not to
dangers present, which is perhaps why more alerts have been placed as compromise on cost or quality.
product testing becomes more rigorous.
3031
SAFETY GATE INSIGHT After an encouraging second quarter with 106 recalls, in the last three months we’ve seen alerts rise again, with 158 submitted. However, this is still significantly less than Q1, with post-Christmas alerts placed resulting in a high spike. Similarly to what we have seen in previous quarters, plastic dolls (17) and toy slime (15) were the products with the most recalls, with the latter up from 10 recalls in Q2 – suggesting that the chemical risk associated with certain toy slime products is still very much present, and is something which should be paid attention to as we approach the festive season. While a spike was observed in recalls placed from the UK, it was Hungary and Poland that topped the list of notifying countries, placing 24 each – with Hungary suffering a huge spike in the past three months. The majority of these recalls were for plastic dolls with phthalate present, a chemical which may harm the health of children, causing possible damage to the reproductive system. Chemical risks similar to the above were by far the most common reason behind recalls in Q3 2019, with a huge jump from 39 placed in Q2 to 76 in Q3 – a rise of 95%. Second to chemical risk was choking, with 40 alerts placed in the time period analysed. As we predicted, recalls with a risk to the environment have seen a significant decrease, down from 42 placed in the first half of the year to just 8 in Q3. However, this is still much higher than the entirety of 2018 and could be indicative of a wider trend as the world becomes more aware of the environmental impact of certain products and materials. We can expect further pressure on regulators to ensure contaminants are not present in toys in the future, given the potentially devastating outcomes. 32
NUMBER OF RECALLS BY COUNTRY OF NOTIFICATION NUMBER OF RECALLS BY RISK TYPE
30 80
70
25
60
20
50
15
40
10
30
5
20
0
10
ia
d
ry
m
y
en
ly
k
d
ce
an
ar
an
an
Ita
ak
do
ga
an
ed
m
rm
l
nl
ov
Po
un
ng
Fr
Sw
en
0
Fi
Ge
Sl
H
Ki
D
d
ite
al
g
l
s
ta
rie
Un
in
ic
en
ok
em
ju
m
In
Ch
Ch
n
ro
vi
En
NUMBER OF PLASTIC DOLL RECALLS
30
PRODUCT Q3 2019
25
Plastic doll 17
20
Toy slime 15
15
Squeezable toy 14
10
Soft toy 10
5
Toy gun 5
0
Plastic toy 5
18
18
19
19
19
20
20
20
20
20
3
4
1
2
3
Q
Q
Q
Q
Q
33ANALYSIS Toy slime has been a focus of Spotlight for several quarters now with 52 recalls over the course of the year so far compared to just 15 for the entirety of 2018. However the public awareness of issues relating to the product means it is likely that the recalls in this market are beginning to plateau, with other more traditional toys to make a comeback this year. And while Q3 2018 did show an increase in slime recalls to 18, we believe this is a legacy issue in reaction to increased media coverage, with 21 recalls of slime in Q1 and 13 in Q2. Yet to be revealed at the time of writing, but the impending Star Wars movie is also likely to add to this market, with a fresh line of merchandise expected as anticipation of the film builds. However, the awareness of chemical threats is unlikely to go away, with continued environmental protests taking place across the world it is likely that scrutiny on what is used to make toys will grow. However, with the increasing number of counterfeiters and scammers creating genuine looking markets on e-commerce platforms, it is important that governments take greater action to ensure the product that reaches consumers is what they expect. Perhaps not in time for this Christmas, we anticipate greater emphasis on this in 2020. 34
35
ELECTRICAL GOODS SPOTLIGHT
Q2 2019 OVERVIEW It’s been a sparky few months in the electronics industry, with Q3 the highest of the year far for recalls, up by 50 to 51%. Unexpectedly, Hungary leapt to the top of the table, placing 14 recalls between July and September. After a very quiet start to the year, this influx of activity is surprising. While USB chargers continue to be at top the list of the most commonly recalled product type for electronics, the number of alerts has decreased from 10 in Q1 to six alerts submitted in Q3. Additionally, there have been a number of new entrants to the recalled product list, including hot plates, insect killers and LED hydroponics lights, each with two recall notices. A broader look at the electronics industry reveals an abundance of new technology which has the potential to impact the recall market as regulators struggle to keep up with the pace of innovation. One such trend is the rise in popularity of smart home devices and other connected products creating a threat of cyber-attacks – with some products designed to steal information. As connection-enabling 5G infrastructure is implemented more broadly, we will look at how this might impact the recall market. A second trend is a rise in sales of ‘killer chargers’. With electric shock the predominant reason for recall in the electrics market (34 notifications placed in Q3 alone), the past quarter has seen a huge spike in reports of ‘killer chargers’ and fake electronics sold under the guise of safe brands to unsuspecting consumers on the online marketplace – with these products not meeting safety standards. Fake chargers are also causing a stir for more sinister reasons, with reports revealing lightning cables with the potential for hackers to remotely take over computers. 38
39
DEEP DIVE
With the rise of smart devices and technology innovations, issues surrounding cybersecurity are beginning to pose different
risks, even new risks, to the ones observed at the moment.
The full implementation of 5G infrastructure is expected to exponentially failing its safety test. When they took the chargers apart, permitted distances
drive the growth of smart devices, at the same time giving rise to the threat between components were too small, leading to an electric shock risk.
from cyber criminals exploiting connected devices to gain access to personal
information. There are far too many sub-par products with serious risks making their way
into consumers’ homes. Which? has taken its findings to the Office for Product
According to new research by the SAM Seamless Network’s Threat Assessment Safety & Standards (OPSS) to “ensure that online marketplaces take their
Lab, smart home security cameras are the most vulnerable smart devices, responsibilities seriously and do not become an unpoliced wild west”.
making up almost half (47%) of overall hacking attempts. Coming in a close
second were smart hubs like Google Home and Amazon Alexa. To link back to the first trend on cybersecurity, recent headlines have revealed
that certain ‘fake’ chargers come with a new type of ‘Trojan horse’ capability,
Leading industry expert Matt Wixey, a cyber-security researcher for PWC, with specially designed lightning cables being sold containing a wireless
warned that hackers are now sophisticated enough to turn in-home, unsecured hotspot that a hacker can use to connect to the user’s device and then run
devices such as smart speakers, headphones and laptops into “offensive” commands on the computer, putting the victim’s files and personal information
weapons by playing ear-damaging audio. at risk.
Although the headlines are worrying, it’s essential that manufacturers take note This is a developing story, first brought to the attention of the world by an
and start thinking seriously about cyber threats as we may soon begin to see a anonymous hacker in August, who revealed it at the Def Con cybersecurity
large number of products being recalled due to personal data safety issues. convention. This highly sophisticated form of hacking can be extremely difficult
for consumers to detect due to the fact that it looks like a legitimate cable and
While USB connectors remain at the top of the list of products recalled in the works just like one too. The hacker/security expert sold out of the cables within
electronics industry for the third quarter of the year, what we may begin to see hours of launching them.
is a rise in recalls linked to sales of ‘fake’ chargers, which have the ability to not
only compromise phones and computers, but can also put the consumer at For manufacturers, urging consumers to purchase from trusted third-party
serious risk. sites and from the manufacturer themselves can help mitigate risks, however as
online marketplaces continue to offer what look like identical products at lower
Increasing sales of fake USB chargers could be partly down to the fact that it’s prices, it’s becoming increasingly difficult for consumers to tell the difference.
extremely difficult to tell the difference between authorised and unauthorised
products, especially when purchasing from an online marketplace. Which? put With hackers continuously finding new ways to access data, we can expect to
this to the test with several lookalike Apple products – with eight out of 11 see recalls of this nature rise in line with risks of electric shock, burns and fire.
4041
SAFETY GATE INSIGHT The third quarter of the year revealed a spike in the number of electronic appliances recalls, jumping from 34 in the last quarter to 51 between July-September. The majority of the recalls were due to risk of electric shock (34), and the item with the most risk was again a USB charger, with six alerts placed – double that of the second-most recalled items in the category, hairdryers and multiplug sockets. However, at the same time, it is worth noting that the number of USB chargers recalled has been decreasing since the beginning of the year. Although certified electrical items adhere to stringent safety regulations, it’s the ‘fake’ items that pose risk, which when tested fail to comply with the Low Voltage Directive, which ensures that electrical equipment within certain voltage limits provides a high level of protection for European citizens. So even though recall numbers of USBs are decreasing, the risks are still present and ever-changing, so manufacturers cannot rest on their laurels. Looking at geographic concentration, Hungary, quite unexpectedly, replaced the UK as the country placing the most alerts in Q3. Following Hungary and the UK, the highest numbers of recalls came from Bulgaria (5) and Italy (4). Finland and Sweden, countries that at the beginning of the year placed at the top of the table for recall alerts placed, have remained low for another quarter, suggesting that this was a spike rather than an ongoing trend. Interestingly, new on the list of the product types with more than one recall in three months are hot plates, insect killer and LED hydroponics lights. Although this is the first appearance for each and therefore cannot be seen as a growing trend, it’s something we will be looking out for, particularly as consumer interest in indoor gardening grows and sales of hydroponic lights increase to reflect this trend. Finally, in Q3 there were three electronic recalls submitted due to environmental risks. This is the highest number of recalls of this type that we have seen this year, with two alerts due to environmental risks submitted in Q1 and none in Q2. The results are fluctuating and as such we cannot yet determine if this will be a continuing trend, however it’s an area we will continue to monitor. 42
NUMBER OF RECALLS BY COUNTRY OF NOTIFICATION NUMBER OF ELECTRONIC RECALLS
16 60
14
50
12
40
10
30
8
6 20
4 10
2
0
19
19
19
0
20
20
20
1
2
3
Q
Q
Q
ry
m
ia
ly
a
ia
d
ia
lic
y
an
ni
an
Ita
ar
en
t
do
ga
b
oa
ua
pu
rm
lg
nl
ov
un
ng
TOTAL
Cr
USB CHARGERS
th
Bu
Fi
Re
Ge
Sl
H
Ki
Li
h
d
ec
ite
Cz
Un
NUMBER OF RECALLS BY RISK TYPE
PRODUCT TYPE Q3 2019
Burns, Fire
USB charger 6
Environment Hair dryer 3
Multiplug socket 3
Burns, Electric shock
Mains extension lead 2
Burns, Electric shock, Fire Insect killer 2
Hot plate 2
Electric shock
LED Hydroponics light 2
0
5
10
15
20
25
30
35ANALYSIS Toy slime has been a focus of Spotlight for several quarters now with 52 recalls over the course of the year so far compared to just 15 for the entirety of 2018. However the public awareness of issues relating to the product means it is likely that the recalls in this market are beginning to plateau, with other more traditional toys to make a comeback this year. And while Q3 2018 did show an increase in slime recalls to 18, we believe this is a legacy issue in reaction to increased media coverage, with 21 recalls of slime in Q1 and 13 in Q2. Yet to be revealed at the time of writing, but the impending Star Wars movie is also likely to add to this market, with a fresh line of merchandise expected as anticipation of the film builds. However, the awareness of chemical threats is unlikely to go away, with continued environmental protests taking place across the world it is likely that scrutiny on what is used to make toys will grow. However, with the increasing number of counterfeiters and scammers creating genuine looking markets on e-commerce platforms, it is important that governments take greater action to ensure the product that reaches consumers is what they expect. Perhaps not in time for this Christmas, we anticipate greater emphasis on this in 2020. 44
45
CLOTHING SPOTLIGHT
Q3 2019 OVERVIEW Europe is home to some of the world’s top producers of textiles and fashion goods. It exports over 60% of production outside of Europe, accounts for 10% of EU export and employs around 5million people. Clothing recalls are relatively small in comparison to categories like food and drink. Yet they continue to make the headlines because, more often than not, many recalls in this category are deemed to pose a serious risk to children. Looking at this quarter in isolation, there were 42 recalls. Cyprus was the country that notified most often (24), followed by Germany (8), Romania (6) and Bulgaria (4). On closer inspection, 35 of the total recalls were in the children’s clothing category. Much the same as in Q2, risk of injury (25) was the most common reason for items of clothing being recalled, followed by chemical risk (9), up from three in Q2. As we predicted in Q2, chemical risks are on the up. And while on the face of it, a rise from three to nine recalls does not seem like a lot, the fact is that there is a trend appearing that has the potential to grow further in the coming months and years. 48
49
DEEP DIVE In July this year, retail giant River Island took steps to recall a number of garments over fears that they had been manufactured using high levels of harmful chemicals. The fashion retailer issued warnings around three products – a playsuit, cami top, and a hoodie. These items were sold in 2018, which meant the retailer had no way of removing the items alone. It had to provide its customers with detailed information on the dangers posed. In a statement, River Island said these products contained lead in excess of legal safety levels and present a serious risk to the health of anyone wearing or handling the product. The company then went on to recall two more garments which included a dress and a blouse, over concerns that these items could contain cadmium in excess of legal safety levels. Customers were told to stop wearing the products immediately and to keep them away from children. While the levels were only fractionally above the limits, River Island put the safety of its customers first and recalled the products. In a follow up statement, River Island said that it was working with its suppliers to find out how it happened and to make sure it does not happen again. This is the first time this year a major retailer has recalled a product like this. Until now it has been more commonplace for these items to be seized on entry to the country. And while we expect more instances like this to happen in the future, reassuringly fashion houses and retailers are looking into their supply chain and coming up their own quality control processes to combat the use of dangerous chemicals in manufacturing facilities. 50
51
SAFETY GATE INSIGHT While the volume of clothing related recalls in Q3 (42) is up on the previous quarter, if compared to the same period in 2018, the numbers have gone down (83). In terms of items recalled, girls dresses (7) and children’s dresses (5) were the two most significant. In Q2 children’s trousers topped the leader board, however there were only four recalls of this item in Q3. 52
NUMBER OF RECALLS BY COUNTRY OF NOTIFICATION NUMBER OF RECALLS PER PRODUCT CATEGORY
30 Leather gloves
25
Girl’s swimsuit
20
Child’s trousers
15
Child’s clothing set
10
Child’s shirt
5
Child’s dress
0
Girl’s dress
us
y
ia
ia
an
an
ar
pr
rm
lg
m
Cy
0
1
2
3
4
5
6
7
8
Bu
Ro
Ge
NUMBER OF CLOTHING RECALLS
NUMBER OF RECALLS PER PRODUCT CATEGORY
100
Injuries, Strangulation 80
Strangulation 60
Choking 40
Chemical 20
Injuries 0
18
18
19
19
19
20
20
20
20
20
0
5
10
15
20
25
30
3
4
1
2
3
Q
Q
Q
Q
Q
53ANALYSIS The swift action taken by River Island in recalling clothing that came to the market with too high levels of cadmium was welcome, but is a bold warning that the issues relating to clothing coming into the marketplace are far from resolved. While there was a steady reduction from 83 recalls in Q3 2018 to 71, by Q4 and just 35 by Q1 2019 and 32 by Q2, the slight increase demonstrates that there is no room for complacency. Part of this reduction could be partly attributed to the backlash against fast fashion, however, it remains to be seen whether the reduction is purely down to consumer habits changing or more down to manufacturers being more proactive at the point of manufacture given the number of recalls in recent years. Meanwhile, issues associated with injury risk persist, something that will be a particular concern for parents, with many of these risks associated with loose cords or pieces of fabric. Once again, the focus will fall upon retailers to due diligence and ensure their products are safe for the market – something that appears to be happening with increasing frequency. The festive period and change of season will of course lead to a swathe of new products to market, but we anticipate any increase to be relatively moderate in line with the past 12 month’s trends. 54
55
MEDICAL DEVICE SPOTLIGHT The following data is the most complete view of European medical device recall data that currently exists. However the information was gathered only from the government websites of the following countries: UK, France, Ireland, Portugal, Germany, Italy, Spain, Denmark and Greece.
Q3 2019 OVERVIEW Geographically speaking, the third quarter of the year has seen a lot of movement in countries placing alerts of medical device recalls, with a big increase in the number of recalls notified by Denmark and Germany. Italy, which topped the list in the previous review period, has seen alerts fall by 43% in Q3 (181 vs 104). In Europe, Germany tops the list of countries manufacturing devices that have been subject to recall (99), followed by the UK (66). However, this dwarfs in comparison to the USA, which was the country of origin for 158 medical device recalls in Q3. Recalls due to quality issues remain the most common, with 257 alerts placed in the past three months. The past quarter has also revealed an increase in the number of medical device recalls due to software issues, which is something we’ll explore in more depth in the next section of the report. 58
59
DEEP DIVE
While recall alerts placed for medical devices have decreased over the past quarter, alerts placed because of software
issues have been gradually increasing since the beginning of the year.
Looking at data from the US, software is currently the most common There is an evidenced need for stricter security regulations, with
issue causing medical device recalls in America, and while European data companies like Johnson & Johnson withdrawing its Animas OneTouch
cannot confirm it just yet, it’s expected that this trend will be replicated Ping after vulnerabilities were detected in the insulin pump system’s
in countries around the world as devices continue to advance. A report cybersecurity. Pacemakers, insulin pumps and other medical devices using
from Transparency Market Research, estimates global medical device software called IPnet have been identified as having potentially hackable
connectivity will reach $33.5 billion this year. software.
As noted in Medical Device Network, referring to the US, “software is The growing need for manufacturers to protect their devices from
driving incredible advancements in medical technology and opening up security threats has led the Advanced Medical Technology Association to
exciting opportunities for decentralised healthcare. But, at the same time develop five principles to make sure devices are as secure as possible: an
software is also the leading cause of device recalls and failures prompting effective cybersecurity risk management program; system-level security;
calls for a shift in focus”. coordinated disclosure; information sharing and consensus standards;
regulatory requirements and education.
Failures of software have resulted in a number of recalls due to patient
safety being put at risk, for example the UK issued an alert on a Dialog+ Although software vulnerabilities are something which should be at the
haemodialysis machine due to risk of malfunction of the temperature forefront of every recall manager’s mind, the prevailing reason for recalls
sensor, meaning the temperature of dialysis fluid could be incorrect, and in this category remains quality issues, which includes everything from the
therefore would affect treatment. breakage of components to defects in vital mechanisms.
As well as risk to patient safety, there are also wider security issues at play. What we can predict here is that with the new quality standards coming
In July, France’s National Agency for the Safety of Medicines and Health into effect next year, quality control will be high on the agenda for
Products (ANSM) developed draft recommendations on the cybersecurity manufacturers, and we can expect to see levels of testing and standards
of medical devices, addressing best practices and appropriate standards. raised in preparation for this.
These new regulations are in line with Europe’s medical device and in-vitro
diagnostic regulations due to come into effect in May 2020 as the first CE-
marking legislation to introduce a security requirement.
6061
GOVERNMENT INSIGHT
In total there were 593 recalls placed in Q3 2019 for medical devices across
Europe, down from 647 in Q2 but up from 309 in Q1 – which could be a sign
that recalls are returning to a steadier level after a mid-year jump. However, it is
too early to know this for certain.
In comparison to the first two quarters of the year, in the last three months
there was a big increase in the number of recalls notified by Denmark (159 in
Q3 compared to 62 in Q2). Similarly, the number of notifications coming from
Germany has increased from 162 in Q2 to 236 in Q3, positioning the country on
the top of the list. Italy, which topped the list in the previous review period (181
recalls in Q2), submitted just 104 medical device alerts in this quarter.
Quality issues remained the most common reason for recalls in Q3, with 257
alerts placed. However, this is drastically lower that the 510 placed in Q2,
suggesting companies are putting more focus on their testing procedures to
prepare for the new EU regulations coming into effect in 2020. The volume of
recall alerts related to software issues (Q1: 41, Q2: 52 and Q3: 91) have been
steadily increasing, as did recalls due to mislabelling (Q1: 18, Q2: 17, Q3: 26).
RISK TYPE Q3 2019
Quality Issue 257
Software Issue 91
Mislabelling Issue 26
Outside of Specifications 10
Other 209
62NUMBER OF RECALLS BY COUNTRY OF NOTIFICATION
250
200
NUMBER OF RECALLS BY COUNTRY OF ORIGIN
150
100
Denmark
50
Sweden
0
Switzerland
y
k
ly
om
nd
e
al
n
ce
an
ar
c
ai
Ita
g
an
ee
la
Sp
tu
m
gd
rm
Ire
Gr
Fr
en
r
n
Po
Ge
Ki
D
Netherlands
d
ite
Un
Republic of Ireland
NUMBER OF MEDICAL DEVICE RECALLS France
700 Italy
600 United Kingdom
500
Germany
400
United States of America
300
0
50
0
0
0
10
15
20
200
100
0
9
9
9
1
1
1
20
20
20
1
2
3
Q
Q
Q
TOTAL SOFTWARE ISSUES
63ANALYSIS The introduction of new quality standards in 2020 will be a welcome development for patients and caregivers alike. However, the enforcement of these regulations in the EU is the loudest warning yet that manufacturers will have their feet held to the fire if they don’t improve standards themselves. While this should, in the long-term, lead to a reduction in quality issues over the coming year and indeed for the rest of 2019, we are anticipating an increase in software issues as the unintended consequences of updating programming to comply with the latest regulations continues. Whether or not these software issues dissipate will depend entirely on how simple the new measures are to implement. Once again, the shadow of Brexit looms, and there will be significant uncertainty over which labelling requirements the UK will adhere to if it leaves without a deal. As such, we anticipate a possible spike in labelling problems in Q4. Whether or not this continues into 2020 will largely depend on how the UK’s health service realigns – based entirely on whether its constitutional crisis is resolved. 64
65
PHARMACEUTICAL SPOTLIGHT The following data is the most complete view of European pharmaceutical recall data that currently exists. However the information was gathered only from the government websites of the following countries: UK, France, Ireland, Portugal, Germany, Italy, Spain, Denmark and Greece.
Q3 2019 OVERVIEW Recalls in the Pharmaceuticals category are often big news due to the fact they are destined for human consumption. Reassuringly the manufacture and production of pharmaceuticals in Europe is highly regulated by the European Medicines Agency (EMA). This means that the medicines which do make their way into our cabinets arrive with a high degree of safety and quality assurance. However, 100% safety can never be fully guaranteed for any product, irrespective of its purpose. Looking at recall data for Q3 2019, there were 99 pharmaceutical recalls from July until the end of September, down from 122 notifications in Q2. On closer inspection one of the largest recalls in Q3 was for products containing Ranitidine, a drug used to treat indigestion, heartburn and acid reflux. The reason for the decision to call the drug in was that both the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) wanted to investigate the presence of N-nitrosodimethylamine (NDMA) – a substance that could cause cancer in humans. While this sounds alarming, the reality is that this substance is found in water and foods that we consumer every day. And health authorities have said that there is no immediate risk. This illustrates how cautious pharmaceuticals companies are when it comes to the quality of their product and indeed the threat of potential reputational issues. We believe that many industries like pharmaceuticals are going above and beyond to ensure they remain sustainable during a time of widespread political unrest. 68
69
DEEP DIVE
In our Q2 update, we reported that political unrest – namely Brexit – could potentially disrupt the supply and regulation of
medicines in Europe.
The news in late September that the European drug delivery systems market Taking the UK as an example, in the event of a no-deal Brexit, the Government
is expected to experience 6.7% growth from 2019-2027 was received by our has published various technical notices to help big pharma companies take
team with cautious optimism. appropriate action. In September two senior NHS bosses for England and
Wales said that they are confident that medicine supplies will be maintained
Growth in Europe’s drug delivery systems is expected for two reasons – rising in the event of a no-deal Brexit. However, those operating the pharmaceuticals
investment in R&D and a swell in chronic disease conditions across Europe. industry have called on the Government for more information on border
We want to explore how this is likely to affect regulatory recalls across Europe procedures.
in the coming months and the impact those could have on market the recent
positive market projections. Chronic conditions such as cardiovascular disease, cancer, respiratory diseases
and diabetes are on the rise and are the leading cause of death in Europe.
The pharmaceuticals industry is core to the European economy, with the Until such a time that investment in prevention outweighs investment in
largest contributors including the UK, Germany and France. This is why these treatments, the number of people living with chronic diseases will continue to
three countries feature most often on the recall barometer – both in terms rise, which will of course put added pressure on the pharmaceuticals industry
of notifications and countries of origin. Looking particularly at investment to meet demand. And when demand outstrips supply – something has got to
into research and development, a paper by PwC – Economic and societal give. Although, we are not quite there yet.
footprint of the pharmaceuticals industry in Europe: June 2019 – stated that
IP incentives and quicker market access are leading factors influencing R&D
investment decisions. It also noted that members of the European Federation
of Pharmaceuticals Industries and Associations (EFPIA) believe that if these
IP incentives were phased out, it would lead to a reduction in their R&D and
commercial footprint.
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