CEO: Michael Mahoney
Based: Marlborough, MA
2016 sales: $8.4 billion
2015 sales: $7.5 billion
* Fiscal year ended Dec. 31, 2016
Boston Scientific started 2016 strong thanks to double-digit growth in four businesses—Endoscopy, Urology and Pelvic Health, Interventional Cardiology and Peripheral Intervention.
Interventional Cardiology logged 13% growth for the full year, driven by the Lotus transcatheter aortic valve and the Watchman left atrial appendage closure device. In particular, Watchman got a boost in February from the Centers for Medicare & Medicaid, reversing an earlier decision to contraindicate the stroke-fighting device for patients on the blood thinner warfarin.
In April, the company suspended European sales for the next-gen Watchman FLX due to a higher-than-expected device embolization rate. But it did not expect the setback to affect its sales. And things are looking up for the device; Boston Sci ended 2016 with more than 200 Watchman centers and plans to add around 150 by the end of 2017. And this summer, the stroke-fighter was the star of Boston Sci’s first TV ad, part of its strategy to boost its position in the industry.
In June, Boston Scientific said it would embark on a global restructuring program to “support long-term growth and innovation.” Without giving too much away, the company said it would start some programs immediately, aiming to get most of the work done by the end of 2018. Layoffs are part of the plan, but Boston Sci doesn’t see its workforce shrinking much as it will create new jobs in “areas of growth.”
Since the announcement, the company has kept quiet on the reorg, though Chief Financial Officer Daniel Brennan noted on the Q4 2016 call that it included campus consolidation and plant network optimization. While the program is slated to cost between $175 million and $225 million, the company expects to save up to $150 million in pretax operating expenses by 2020.
Boston Sci made a handful of deals in 2016, including its $210 million EndoChoice buy, which padded its Endoscopy unit with a range of products, including the Fuse Endoscopy System, which allows clinicians nearly twice as much as a traditional endoscope would. The company also beefed up its endoscopy pipeline with its acquisition of LumenR’s in-development endoscopic tissue retractor, designed to remove lesions in the gastrointestinal tract.
The company also bolstered its Structural Heart unit, paying up $75 million for Neovasc’s tissue-processing tech, which is used to produce components for transcatheter heart valves, such as Boston Sci’s Lotus. It also added Cosman Medical’s radiofrequency ablation systems—used to treat chronic pain—to its neuromodulation stable.
Despite a couple of pelvic mesh-related events, Boston Sci’s Urology and Pelvic Health units did alright, notching 14% growth in 2016 after a 35% bump the previous year. While the hurdles weren’t on par with the million-dollar verdicts of 2014 and 2015, the devicemaker does face a grand jury inquiry into its use of counterfeit materials for the implants, as well as an appeal in the first vaginal mesh case to go to trial.
The company took its TAVR patent spat with Edwards stateside in April, after first filing suit in Germany the previous year. The pair is duking it out over a market important to their respective bottom lines. In 2016, Edwards’ Sapien 3 device buoyed its transcatheter heart valve sales 38% to $1.63 billion, while Edwards had to lower its sales expectations due to a worldwide recall of its Lotus TAVR.
While a pair of European patent courts issued rulings on the patents in 2017, Edwards has made it clear it plans to appeal both decisions.