Boston Scientific Wants To Spend On Growth, Not Big Studies

Boston Scientific Corp. (BSX) isn't planning a big boost to research and development spending but plans to better focus on growth initiatives, and is done spending on big studies that benefit competitors, the company's chief executive said Tuesday.

One example is the company-sponsored, $38 million "Madit-CRT" trial released last year that showed a certain kind of implantable defibrillator can slow the course of heart failure in patients with milder cases. The study was launched long before Ray Elliott took over as chief executive in July and also helps rivals Medtronic Inc. (MDT) and St. Jude Medical Inc. (STJ).

The study was nice "but it won't happen again," Elliott said Tuesday, speaking during a JPMorgan health-care conference in San Francisco. "We can't afford to fund the world's studies."

He said Boston Scientific has "an academic feel" and that "we need to be more self-serving."

Shares of Boston Scientific recently traded up 14 cents, or 1.5% to $9.21 per share.

A veteran medical-devices CEO who long led orthopedics company Zimmer Holdings Inc. (ZMH), Elliott announced right away that he wanted to diversify Boston Scientific's offerings. The Natick, Mass., company is well known for drug-coated heart stents that open clogged arteries and heart-rhythm devices like implantable defibrillators, but these business face near-term growth challenges. Elliott spoke Tuesday about investing more broadly within these and other markets.

Part of the focus in a 100-day plan launched after he took over was the reallocation of R&D spending. The second 100 days, he said Tuesday, will include a focus on executing "growth initiatives."

He pointed to several different areas of interest in the cardiology and neurology fields, including products to treat the heart-rhythm issue atrial fibrillation; a drug-coated balloon to treat clogs in femoral arteries; deep-brain stimulation technology that uses pacemaker-like devices to treat neurological issues; and hypertension, among others.

Elliott also highlighted growth initiatives in the company's endosurgey business, including women's health and obesity.

In many cases Boston Scientific had efforts underway in these areas, "but a lot of it has been sitting on a shelf," Elliott said. "Clearly while we had interesting dreams and lots of conversations, we weren't putting our money where our mouth was."

The company is focusing on building and shifting R&D, but won't shift total spending much from around the $1 billion-per-year amount, Elliott said.

Regarding trials, he talked about spending more on "comparative effectiveness" studies, which are studies designed to match up certain methods or technologies against others to determine what works best. The Obama administration has also shined a spotlight on such research.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

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