Coloplast feels weight of rival's vaginal mesh legal woes

Coloplast is feeling the sting of C.R. Bard's ($BCR) vaginal mesh trial defeat all the way in Denmark. And other competitors in the space may begin to face similar pain.

As Bloomberg notes, the Danish medical device maker also produces vaginal mesh implants, and is gearing up for many lawsuits from U.S. patients. Coloplast is more likely to lose its court cases, observers fear, now that Bard has been ordered by a federal court jury in the U.S. to pay $2 million in damages to a woman who claimed the company's implant was defective and harmed her.

Coloplast's stock traded early afternoon local time on Aug. 16 at 306.90 kroner ($55), a drop of more than 1.6%. Bloomberg notes the price is the lowest since May. But while the company has said it doesn't expect the lawsuits against it to create "a significant financial impact," the story notes analysts are wary all the same.

Soeren Soerensen, an analyst with Nordea Markets, told investors, as quoted by the news service: "We still see significant uncertainties regarding the potential outcome for Coloplast, but we expect the verdict to put pressure on the share price."

But Bard's latest jury defeat raises the broader question of whether investors will also punish other makers of vaginal mesh products down the line. Thousands of lawsuits are pending against Johnson & Johnson ($JNJ), and many other makers of the controversial product beyond Bard and Coloplast. And the FDA is currently poring over safety data from 31 vaginal mesh implant manufacturers, including Bard, J&J, Boston Scientific ($BSX) and Endo Health Solutions ($ENDP). Now that Bard has lost two vaginal mesh lawsuits, they serve as test cases for the future. Investors and the companies themselves likely see an increased risk of more jury defeats.

Will vaginal mesh manufacturers like Coloplast and Bard eventually settle in order to put this legal morass behind them? After all, jury verdicts place a variable on how much these lawsuits will ultimately cost. As these companies face more jury defeats, the odds of out-of-court settlements may rise significantly. And those extra costs will anger investors.

- here's the Bloomberg story