STJ ST. Jude Medical, Inc.

Boston Scientific Corporation (BSX) has received approval from the US Food and Drug Administration ("FDA") for use of its Ion and Taxus Liberete stents in patients experiencing an acute myocardial infarction (“AMI”), commonly called a heart attack. These are thus the only drug-eluting-stents (“DES”) in the US for treatment of heart attack patients.

The FDA approval is based on positive data from the HORIZONS-AMI trial, where 3,006 patients were randomized to receive either DES or bare-metal stents (“BMS”) for the treatment of AMI. It was observed that paclitaxel-eluting stents were more effective to bare-metal stents. We expect Boston Scientific to garner higher revenues from this approval as the new indication accounts for approximately 10% of all coronary interventions.

The latest development will undeniably come to the aid of a huge patient population as, according to estimates from the American Heart Association, death by heart attack accounts for one out of every six deaths each year in the U.S. There are more than 1.2 million new and recurrent cases of heart attack each year, with approximately 34% succumbing to death.

Over the past few quarters, Boston Scientific has been working on expanding its portfolio of core segments consisting of stents and defibrillators as these businesses are witnessing several headwinds. The recently reported quarter was no exception as global sales of coronary stent system (within Interventional Cardiology), at $381 million, declined 6.8% due to disappointing performance from both DES that declined 5.6% to $356 million and BMS that dropped 21.8% to $25 million.

Given the headwinds currently at play for Boston Scientific, the company has been undertaking several strategic initiatives that included focus on emerging markets, restructuring initiatives, among others. In this respect, the company recently announced the first implants of a Teligen implantable cardioverter defibrillator (“ICD”) in China that is designed to treat sudden cardiac death.

In November last year, Boston Scientific received approval from State Food and Drug Administration (SFDA) for the Teligen franchise. With the world's largest population in China, this region represents one of the world's fastest-growing ICD markets, which is estimated to grow more than 15% annually over the next five years.

Boston Scientific is not the only company to eye the emerging markets. Major players in the MedTech sector such as Medtronic (MDT) and St Jude Medical (STJ) have also adopted a similar strategy to counter a challenging top line. 

Longer term, we have a Neutral recommendation on Boston Scientific. The stock retains a Zacks #3 Rank (“Hold”) in the short term.

 
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