) has expanded its drug eluting stent ("DES") portfolio with
approval from the US Food and Drug Administration ("FDA") for
longer lengths of Promus Element Plus stent. Subsequent to the
approval, the stent (in both 32 mm and 38 mm) would be available in
the US with immediate effect. The approval, which was expected in
mid-2012, came on time and will help win market share.
DES sales have benefited from the earlier-than-expected approval
of Promus Element plus in the US (in November 2011) along with
launch of the product in Japan and Canada, both in March 2012.
Within four weeks of launch, in Japan, the company successfully
converted 75% of Promus volume to Promus Element. Market share
thereby improved smartly from 32% to 42%.
The recent approval expanding the portfolio further should help
in the penetration of the product. The approval of Promus Element
in US and Japan represents $200 million in additional annualized
gross margin contribution at the end of 2012. This is a part of the
targeted $650-$750 million opportunity for improvement in operating
profit over the next few years.
Boston Scientific's focus on portfolio expansion is inevitable
in the face of severe headwinds in its core segments of stents and
defibrillators. Other players in the medical devices space such as
St Jude Medical
) are also resorting to various alternatives to revive their
flagging top line.
The company's focus on portfolio expansion is yielding results
with several product approvals. Last month, the company received
FDA approval for the Epic vascular stent, which is meant to open
blocked arteries in patients with iliac artery stenosis. The FDA
approval of the Epic vascular stent comes on the heels of CE Mark
approval and subsequent launch of Innova self expanding bare metal
stent. The Innova stent is designed to treat peripheral vascular
lesions in arteries above the knee.
Some of the other significant products in the company's pipeline
include the fourth generation Synergy DES (CE Mark expected in late
2012 with full launch in 2013) and Vercise deep brain stimulation
program for the treatment of Parkinson's disease. Both these
technologies are expected to contribute to revenues from 2013 and
incrementally in 2014.
We have a Neutral recommendation on Boston Scientific. The stock
retains a Zacks #3 Rank (hold) in the short term.
BOSTON SCIENTIF (BSX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
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