Viewing the huge potential of the renal denervation market,
) plans to acquire Vessix Vascular, which has developed the
percutaneous radiofrequency balloon catheter technology for
treatment of hypertension. In addition to an upfront payment of
$125 million, Boston Scientific might have to pay $300 million
based on certain clinical and sales-based milestones. The deal is
expected to close by the end of November 2012 and would become a
part of the Peripheral Interventions business of the company.
The renal denervation franchise, a therapy for the treatment
of uncontrolled hypertension, holds immense potential as more
than one billion people globally suffer from hyepertension.
This segment is expected to be a multi-billion dollar
market by 2020. Vessix Vascular's V2 renal denervation system has
received the CE Mark in Europe and Therapeutic Goods
Administration ('TGA') approval in Australia. The company expects
to initiate a full launch of the product in CE Mark countries in
The renal denervation market has attracted many MedTech
players so far.
) Symplicity system has received both CE Mark and Australia's TGA
listing, but is yet to receive approval in the US. The Symplicity
system was inducted in the company's portfolio with the
acquisition of privately-held Ardian, in January 2011. During
fiscal 2013, revenue from this business is expected to almost
double to $60-$70 million.
St Jude Medical
) EnligHTN renal denervation system received CE Mark approval as
well and was launched this year in several markets. Earlier this
month, the data presented at a conference demonstrated that the
EnligHTN renal denervation system provided a safe, effective and
sustained reduction in office and ambulatory blood pressure
measurements at six months.
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 focus on emerging markets. The company also
plans to invest approximately $150 million in China, one of the
world's fastest growing and largest medical devices markets, over
the next 5 years to build a local manufacturing operation. We are
impressed with Boston Scientific's recent acquisition which
reflects its focus on new therapies to drive top line.
We expect these factors to benefit the company over the long
term and as such we have a 'Neutral' recommendation on Boston
Scientific. The stock retains a Zacks #3 Rank ("Hold") in the
BOSTON SCIENTIF (BSX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
To read this article on Zacks.com click here.