The past week has been eventful for the healthcare sector,
impacting two medical device companies under our coverage. During
the week, Boston Scientific (
) released data from a clinical trial called "Prevail", where its
Watchman devices produced better safety results than what the
earlier trial had suggested. However, its efficacy was similar to
standard blood thinner Warfarin in preventing stroke in atrial
fibrillation patients. Meanwhile, Abbott Labs' (
) MitraClip heart valve showed positive results in patients with
conditions considered high risk for surgery.
Watchman is implanted in atrial fibrillation (irregular
heartbeat) patients to reduce the risk of strokes. In the highly
anticipated "Prevail" clinical trial data released last week,
Watchman posted a significant drop in serious complications
(build-up of fluid around the heart and stroke) rate compared with
the previous "Protect AF" trial. While in the "Protect AF" trial,
Watchman demonstrated similar efficacy as Warfarin, a standard
blood thinner, the data showed a high rate of complications,
compelling the FDA to hold back approval. With the new results, the
company will hope the FDA will grant approval for the new device
The device has already seen a huge uptake in international
markets with implants growing over by nearly 65% on a
year-over-year basis (Read
Boston Scientific Revised To $8 On Acquisitions, New Products &
Cost Cutting Efforts
). If approved, it will be the only device of its kind in the U.S.
at this time and will have the first mover advantage in a
potentially large market. Atrial fibrillation affects almost 3
million people in the U.S. alone. However, what can limit the
device's potential is that it has no major efficacy over Warfarin.
Without demonstrating that, the use of the device is expected to
remain limited to patients with high risk of bleeding, a serious
side-effect of Warfarin.
The device is part of the CRDM division, which includes products
like implantable cardioverter defibrillators (ICDs) and pacemakers,
in our model. The division has witnessed a sharp decline in
revenues due to weak demand for its ICDs. Going forward, we expect
the device maker's market share to continue to decline, although at
a slower rate. This is mainly due to products like Watchman.
See our complete analysis of Boston
Abbott's MitraClip is used in patients with mitral
regurgitation, one of the most common heart valve conditions. The
device improves the heart's efficiency to pump blood. According to
a recent trial data, MitraClip showed a massive 96% implant success
rate in patients at high-risk to be treated with surgery. The
device also exhibited a few adverse effects along with a
lower-than-expected mortality rate.
Abbott's Vascular division is facing near-term challenges due to
weakness in the U.S. drug-eluting stent market and growing
competition. Further, the healthcare company's contract to supply
Promus stent to Boston Scientific expired in mid-2012 and the
latter started manufacturing a new version of Promus internally
since then. All these factors have dragged down growth as Abbott
generates a significant chunk of Vascular revenues from its
However, with new products like MitraClip, we expect Abbott to
improve its market share going forward. Mitral regurgitation is
estimated to affect almost 1 in 10 individuals aged 75 and older.
While MitraClip is already available in various markets following
European CE Mark approval in 2008, the major U.S. market still
evades it. With the impressive efficacy in patients at high-risk to
be treated with surgery, Abbott can certainly hope to get approval
for the patients group very soon, if not for all the patients.
See our complete analysis for Abbott Labs
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