New Market for Abbott’s XIENCE V

Abbott’s (ABT - Analyst Report) XIENCE V Everolimus Eluting Coronary Stent System received approval from the Chinese State Food and Drug Administration (SFDA) for the treatment of coronary artery disease (CAD). Abbott is looking to launch the product in the fourth quarter.

In our opinion, the launch of XIENCE V in China should bring in significant incremental revenues for the company’s Vascular Product division, which posted sales of $2.2 billion in 2008. China is the second-largest drug eluting stent market in the Asia-Pacific region after Japan. With the approval in China, XIENCE V is now available in every Asia-Pacific market except Japan, where the product is currently being reviewed by the regulatory authority. XIENCE V’s launch in Japan in early 2010 could potentially add another $500 million market opportunity.

CAD is the leading cause of death in China - according to the China Chronic Heart Disease 2006 annual report, nearly 50% of all deaths annually in China are due to CAD. Moreover the occurrence of the disease has been increasing steadily every year. Each year, about 150,000 patients undergo a stent procedure for the treatment of CAD, with the number of procedures is growing by more than 20% annually.

Following the launch of XIENCE V, Abbott has become a major player in the drug-eluting stent (DES) market. XIENCE V has been taking significant domestic and international share from Boston Scientific’s (BSX - Analyst Report) Taxus (paclitaxel-eluting system), Medtronic’s (MDT - Analyst Report) Endeavor, and Johnson & Johnson’s (JNJ - Analyst Report) Cypher (sirolimus-eluting system) drug-eluting stents.

Data on XIENCE V compared to both Taxus and Cypher shows XIENCE V to be the best available product on the market with respect to reducing rates of target revascularization, reducing rates of stent thrombosis, and providing a reduction in risk of major cardiac events (MACE) and all-cause mortality.

Abbott is currently working on a next-generation drug coated stent called XIENCE PRIME. PRIME is already available in Europe and other countries throughout Asia-Pacific and Latin America, and is currently in a large scale clinical program called SPIRIT PRIME in the U.S. If approved, PRIME could hit the U.S. market in the first half of 2012.

Abbott’s Vascular Products segment should continue posting robust growth mainly due to the strong performance of XIENCE V. We have a Neutral rating on Abbott.

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