Boston Scientific Wants To Spend On Growth, Not Big Studies
January 12 2010 - 12:51PM
Dow Jones News
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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