Boston Scientific ($BSX)
CEO: Michael Mahoney
Based: Marlborough, MA
2015 sales: $7.5 billion
2014 sales: $7.4 billion
Boston Scientific ($BSX) notched just over 1% sales growth in 2015, remaining in 10th place in the med tech ranks. However, 2015 saw the company log key device nods and acquisitions as well partnerships to boost its offerings as it looks toward 2016.
Boston Sci has executed a consistent acquisition strategy like its peers Stryker and Medtronic. It has grown significantly via M&A and in the Q4 earnings call, CFO Daniel Brennan noted that the company is "actively" seeking tuck-in deals for 2016.
The major approvals of 2015 came from Cardiovascular, Boston Sci's largest unit. They included the FDA's February green light for the stroke-fighting Watchman and its October OK for the first partially bioresorbable stent, Synergy. And while peak sales estimates for Watchman range from $170 million to $500 million, Boston Sci is emphasizing a "slow, controlled" rollout to allow for rigorous training in a bid to allay concerns about procedural complications.
As for the Synergy stent, CEO Michael Mahoney said on the Q4 earnings call that the company is capitalizing on its status as the purveyor of the first partially resorbable stent. "We believe we deserve a pricing premium for the product; … we think we are uniquely positioned with it." At the time, the device had received reimbursement in France and launched in Japan, setting up for a big year.
Boston Sci's Medsurg unit is its second largest, comprising Endoscopy, Urology/Pelvic Health and Neuromodulation. Building on the 5% growth in its endoscopy unit during Q1, Boston Sci acquired Xlumena for up to $75 million. The startup's Axios is the first stent designed for the transluminal drainage of pancreatic fluids during endoscopic ultrasound. It also launched its upgraded SpyGlass DS in July, to treat conditions of the liver, gallbladder, pancreas and bile ducts. Mahoney credited the Endoscopy unit's 7% growth in Q4 to the company's expanding global reach and the ongoing launches of these two devices.
Despite the continuing furor over vaginal mesh implants--Boston Scientific counts about 35,000 claims and had $1.936 billion in legal reserve as of December 31, 2015--Urology and Pelvic Health logged the highest growth in 2015, 36%. This growth will be complemented in the future by the continued integration of the AMS Men's Health and Prostate Health businesses, acquired for $1.6 billion from Endo ($ENDP). While some "softness" was expected in these units following the buy, their integration is "on track" and Mahoney expects to see AMS grow over 2016. The acquisition came on the heels of a $600M settlement with J&J over its Guidant buy, the largest acquisition in company history.
In November, Boston Sci dived deeper into oncology with its purchase of Texas-based CeloNova's interventional radiology portfolio. It coughed up $70 million upfront for a trio of microsphere drug products. While the company already offered devices, such as a pancreatic stent that can be used structurally to treat cancers, this acquisition marks its entry into radiology treatments.
The Rhythm Management unit managed just 1% growth in 2015, thanks to stiff competition from Medtronic. However, Boston Sci manufactures the world's first and only S-ICD (subcutaneous implantable cardioverter defibrillator). Mahoney expects growth in this segment to pick up in 2016, banking on its leading position and "growing awareness" of S-ICD as well as new product launches to deliver sales.
U.S. sales made up just over half of 2015 sales, but Boston Scientific is eyeing emerging markets as avenues for growth. These markets accounted for 11% of revenues and grew 13% in 2015. The company launched a number of its SFA core metal stents in Asia and invested in Peripheral Interventions in emerging markets. These moves are helping the company grow its business in those markets as well as on a global scale, Mahoney said on the call. In addition, it partnered with Chinese surgical device maker Frankenman Medical Equipment in April to develop and manufacture endoscopic products for the Chinese market. The tie-up also includes expanding its sales capacity by enlisting Frankenman to commercialize some of its products in that country.
-- Amirah Al Idrus (email | Twitter)
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