Healthcare Disposable Nonwovens

In the last 4C (23/10/17), in the November Investor presentation and at the November AGM, the company has referred to moving into the space of healthcare disposable nonwovens. It was stated that Alexium expects its work in this new sector to convert into active sales within six months (i.e by CY Q2, 2018).

More recently, in the announcement of the SPP offer (11/12/17), it was stated that the company had successfully completed product validation and production scale up trials in early December, with a full-scale production trial anticipated in Q3 FY 2018 (i.e by CY Q1, 2018).

The company didn’t specify which disposable nonwoven product(s) it was working on, or which chemistry was being used, but the November presentation included a photo of gowned staff in a surgical setting and the Petra Capital Report (05/12/17) specifically referred to medical gowns.

In the United States, the FDA recognizes the consensus standard ANSI/AAMI PB70:2003, “Liquid barrier performance and classification of protective apparel and drapes intended for use in health care facilities” for medical gowns. Gowns and other protective apparel intended for use in health care facilities are tested and classified using four levels, ranging from minimal risk (Level 1) through to high risk (Level 4) – which is used in long, fluid intense procedures and  when pathogen resistance is needed or infectious diseases are suspected.

One prominent global supplier of disposable medical gowns is Halyard Health, which was spun out of Kimberly-Clark in 2014. Its Level 4 MicroCool disposable gowns are marketed as having the following “important properties for surgical gowns”:

Fluid-Resistance
AAMI Level 4 Liquid Barrier Standard
ASTM F1670 and ASTM F1671 standards for resistance of materials used in protective clothing.

Microbial Resistance
ASTM F1671 standard for bacteriophage penetration
European Norms (EN ISO 22610) for resistance to wet microbial penetration.

Flame Resistance
ISO standard for ignition resistance (ISO 11810-1 Class  I1-21—No ignition).

Lint and Abrasion Resistance
ASTM D4966 for abrasion resistance
produce fewer than 20 particles of lint at the 10-micron level on the Gelbo lint test.

Breathability (Wicking)
allows moisture vapor to pass through almost instantly, as measured by the Moisture Vapor Transfer test.

Interestingly, a class action lawsuit was filed against Halyard Health and Kimberly-Clark in late 2014 by hundreds of California hospitals and other health facilities. It was alleged that Kimberly-Clark had misled buyers about the impermeability of its Level 4 MicroCool surgical gowns, which were introduced into the market in 2012 and marketed as meeting the standards listed above. Yet, internal documents produced in court showed that Kimberly-Clark executives knew their gowns were failing compliance tests as early as February, 2012. Testing by an independent lab found that 48 out of 96 gowns tested failed compliance tests. Of those 48 failures, the vast majority – 32 gowns – were found to have failed catastrophically. A former executive testified that design changes were made to the gowns after the FDA had approved the design in 2010 and that those changes were driven by cost reduction and were not implemented to improve performance.

In April 2017, a federal jury in California returned a $454 million verdict against Kimberly-Clark and Halyard Health. Kimberly-Clark responded in June 2017 by suing Halyard Health for $350 million. In turn Halyard Health announced that it was exploring a sale of its surgical and infection prevention business, which includes surgical drapes and gowns. The company was subsequently acquired in November by Owens and Minor for $710 million.

It’s a salutary lesson in what can happen if a company tries to cut costs by ignoring regulatory standards.
Surely a preferable alternative would be to find a cheaper way to meet the regulatory standards, and this, perhaps, is where Alexium may fit in. I note that Alexium already supplies chemistries in flame resistance, fluid-resistance (tenting), microbial resistance (bedding) and wicking (apparel) so any or all of these chemistries could be required if Alexium supplies into this space.