Boston Scientific Corporation
) plans to acquire Rhythmia Medical, which would strengthen its
foothold in the electrophysiology ablation business. This is
significant as electrophysiology representing a $2.5 billion market
opportunity is growing at a double-digit clip.
Apart from an upfront payment of $90 million, an additional $175
million could be paid depending upon certain sales based milestones
through 2017. The deal, expected to be completed by the end of this
week, is not likely to have any material impact on its adjusted
earnings for 2013 and 2014, but could be accretive thereafter.
Rhythmia Medical develops next-generation mapping and navigation
solutions for use in cardiac catheter ablations and other
electrophysiology procedures, including atrial fibrillation and
atrial flutter. Atrial fibrillation, disrupting the ability of the
heart to beat regularly and pump blood efficiently,
affects approximately 15 million people worldwide.
Rhythmia Medical has developed a mapping technology which should
improve treatment options thereby benefiting the patients.
Subject to approval of the mapping system in the US and
Europe, Boston Scientific plans a limited launch in 2013, followed
by a full market launch in 2014.
Last month Boston Scientific decided to acquire Minnesota-based
BridgePoint Medical in order to strengthen its interventional
cardiology portfolio. The transaction is expected to close in the
fourth quarter of 2012. On successful completion of the deal,
Boston Scientific's portfolio would include a catheter-based system
developed by BridgePoint Medical to treat coronary chronic total
We are impressed with Boston Scientific's recent acquisitions,
which reflect its focus on new therapies to drive the top line.
This strategy is significant given the poor performance of its core
segments of stents and defibrillators.
Moreover, against the backdrop of flattening or declining sales
in the developed markets like the US and Europe, Boston Scientific
is gradually strengthening its presence in the emerging markets of
India and China that recorded over 40% growth on a combined basis
during the reported quarter. This strategy has been adopted by its
St Jude Medical
). The company 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. This would cater to the Chinese market and help develop
a training center for healthcare providers.
We have a 'Neutral' recommendation on Boston Scientific. The
stock retains a Zacks #3 Rank ("Hold") in the short term.
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