Back to top

Analyst Blog

Boston Scientific Corporation made a major breakthrough with its receipt of the U.S. Food and Drug Administration’s (FDA) go-ahead for its new drug-eluting stent (DES) system, designed to treat coronary heart diseases. Subsequent to the approval, this next-generation durable polymer drug-eluting stent, Promus PREMIER Everolimus-Eluting Platinum Chromium Coronary Stent System was launched in the U.S.

The company also announced the first implantation of this stent, to be performed by Martin Leon, director at the Center for Interventional Vascular Therapy at Columbia University Medical Center in NY. In Feb 2013, Boston Scientific received the European CE mark approval for this system.

Coronary artery disease refers to the narrowing of blood vessels that supply blood and oxygen to the heart, leading to pain, shortness of breath, and fatigue to the extent of heart attack. Placement of a stent in the artery in this case helps keep it open allowing the blood to flow more freely. Recent, data shows that the market for coronary heart disease is growing at a steady pace.

While we are encouraged with the approval of Promus PREMIER in the U.S., Boston Scientific’s Interventional Cardiology segment has been recording declining sales over the past few quarters, primarily owing to disappointing performance of the coronary stent franchise. This is significant as the company in the recently reported third quarter derived 16% of its total revenue from coronary stents.

During the quarter, global sales of the coronary stent system (within Interventional Cardiology) were $277 million, down 8.9% due to disappointing performances of drug-eluting stents that slipped 7.4% to $262 million as well as bare-metal stents that plunged 28.6% to $15 million.

Despite relatively stable U.S. DES share, both sequentially and year over year, sales in the U.S. market declined 13.8% year over year to $106 million during the quarter. DES sales in the international market dropped 2.5% to $156 million as growth in emerging markets was offset by loss of sales in Germany. We note that the negative impact of the OrbusNeich injunction hampered the company’s sales in Germany during the quarter.

The company’s DES business in the U.S. has been struggling due to several headwinds – lower pricing, softness in percutaneous interventional volume and share losses following the launch of Medtronic’s Resolute Integrity stent.

Given the several headwinds currently at play, Boston Scientific continues to focus on strategic initiatives to drive growth and profitability. These include strengthening its portfolio, targeting suitable acquisitions in areas of unmet medical needs and focusing on emerging markets. We also note that the company is working on penetrating its Element platform in emerging markets, including India, Brazil and China, and expects this to continue to accelerate growth through the current fiscal. We expect these factors to benefit the company over the long term.

Boston Scientific now carries a Zacks Rank #2 (Buy). Other better-ranked medical device stocks include AngioDynamics Inc. and CryoLife Inc. . Both these stocks hold the same Zacks Rank as BSX.

Please login to Zacks.com or register to post a comment.