It is uncertain how the FDA will rule on this case but it would appear that other food and beverage manufacturers are also starting to get worried. Indeed, after discussions with the FDA, Wrigley has stopped production of its caffeine injected gum. Just one piece contains 40 milligrams of caffeine, roughly half a cup of coffee. Monster Beverage Corp (NASDAQ:MNST) has also re-branded its drinks as beverages rather than dietary supplements and now lists the caffeine content on the packaging.
Intuitive
Intuitive Surgical, Inc. (NASDAQ:ISRG) has suffered over rumours about an FDA investigation concerning the safety of Intuitive’s Da Vinci robotic surgery system after the government body noticed a rise in the number of complaints it received about the system.
The Da Vinci system is Intuitive Surgical, Inc. (NASDAQ:ISRG)’s only product, apart from system modifications and add-ons so if the FDA found the system un-safe, it will be the end-of-the-road for the company.
According to a report by the AP, over 500 incident complaints have been received by the FDA since the beginning of 2012. Surprisingly, these complaints have not be filed by patients but by hospitals or by Intuitive itself. In addition, while 500 complaints might seem like a significant number, it is actually 0.125% of the 400,000 surgeries performed by the device annually.
However, Intuitive released a statement shortly after the FDA investigation was announced, commenting that the rise in complaints or Medical Device Reports (MDR) was due to a change in MDR reporting practices. Intuitive Surgical, Inc. (NASDAQ:ISRG) also stated that the majority of the sudden influx of MDR’s were reports of device malfunction reports, none of which involved ‘reportable injuries or deaths’.
Despite this statement from Intuitive, there are rumours in the market that these issues could be more widespread and that accidents in robot surgeries are generally underreported. Furthermore, there are claims that the reports filed since the beginning of last year include five deaths.
The FDA investigation continues, however, if Intuitive is found to be at fault and its Da Vinci system is shut down, the company will lose its only product.
Conclusion
All three companies face potential regulation that could end their businesses but the two I am most worried about are Lorillard and Monster.
Lorillard Inc. (NYSE:LO) is not worth the risk, there are other tobacco companies around that will provide the same kind of returns that are not facing such strict regulation. In addition, Monster Beverage Corp (NASDAQ:MNST) appears overpriced when compared to larger peer The Coca-Cola Company (NYSE:KO), which offers better long term returns, diversification and is not being threatened with the possibility of crippling regulation.
Intuitive appears to be in a better position as the company’s sole aim is to manufacture machines that are improve public health and well-being, which indicates that regulators will look at the case under a more positive light, a trait neither Monster or Lorillard can claim.
So, if investors want to run gauntlet of FDA regulation, Intuitive Surgical, Inc. (NASDAQ:ISRG) could be the best bet.
Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool recommends Intuitive Surgical and Monster Beverage. The Motley Fool owns shares of Intuitive Surgical and Monster Beverage.
The article Three Companies That Face Show-Stopping Regulation originally appeared on Fool.com.
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