Boston Scientific Counting On SYNERGY, Watchman, Vercise Devices To Drive Growth
By Jof Enriquez,
Follow me on Twitter @jofenriq
Boston Scientific is confident that newly-launched medical devices — such as its SYNERGY drug-eluting stent (DES) and Watchman anti-stroke implant — will be major growth drivers, moving forward, to compensate for tepid sales of defibrillators and pacemakers.
"We do believe we have the ability to gain share with SYNERGY despite a price premium, given the unique characteristics of the platform, combined with the comprehensive other solutions that we offer, including chronic total occlusion, the Watchman device, and others in interventional cardiology," said Mike Mahoney, president and CEO, Boston Scientific, during a conference call, according to a transcript from The Street.
The company's SYNERGY Bioabsorbable Polymer Drug-Eluting Stent System (BP-DES) was approved by the U.S. Food and Drug Administration (FDA) earlier this month after a clinical trial demonstrated favorable clinical outcomes. The stent was designed to allow drugs and polymers coating the metal mesh stent to dissolve at the same rate, decreasing the risk for clots associated with long-term polymer exposure in the arteries. Other DES products, which leave a permanent polymer coating after the drug dissolves, posed a two-percent risk of long-term problems, according to Boston Scientific.
Since Boston Scientific considers SYNERGY as a next-generation therapy with solid clinical evidence for safety and healing, it plans to continue charging a premium price for the product. The company claims SYNERGY already has 50 percent market share in ten markets in Europe, despite the price. Boston Scientific plans to use a more tiered pricing strategy in the U.S. market. where hospital clients prefer value-based alternatives. However, the company says a post-approval study, the short-DAPT trial with SYNERGY, will help it justify the premium to clients.
"From a pricing point of view, clearly many hospitals would desire no price premium. We don't believe that's warranted, based on the acute performance of the stents, and also the experience that we have seen in Europe. But we also have a terrific alternative for hospitals with our Promus Premier. So it's our job to prove the unique benefits of the platform that justify the premium. We've done that in Europe, and that will be our plans as well in the US," Dan Brennan, EVP and CFO, Boston Scientific, told analysts during the call.
Boston Scientific also is optimistic that its anti-stroke Watchman device will be a key contributor in coming years. The company received FDA approval for Watchman in March, and the device is currently in a "controlled" launch involving rigorous training of select doctors. Boston Scientific is pursuing Centers for Medicare and Medicaid Services (CMS) reimbursement for the device, which could potentially net as much as $500 million in sales for Boston Scientific annually, according to the Wall Street Journal.
"We're really well on track of our goal of opening 100 centers this year, so we'll deliver against that, and then we'll open up new centers in 2016," Mahoney said in the call.
He also expressed optimism on prospects for Boston Scientific’s deep brain stimulation (DBS) portfolio, particulary the CE-marked, U.S.-investigational Vercise platform.
"We have a primary cell DBS launch called Vercise that we're really excited about, because that's the primary focus is on primary cell rather than rechargeable for DBS. We're also enrolling our DBS trial in the US, which we will provide additional guidance on in the future. So that business continues to expand," Mahoney told analysts, according to the transcript.
For Boston Scientific, offering new category-forming devices could help compensate for soft sales of defibrillators and pacemakers due to scaling down of the replacement cycles on those products. Cardiac Rhythm Management (CRM) sales for the third quarter were flat at $451 million year-on-year, according to Yahoo Finance. Worldwide sales from pacemakers decreased 5.3 percent to $125 million, while defibrillator sales declined 6.3 percent to $348 million due to foreign exchange headwinds.
For Boston Scientific’s Cardiovascular business, Interventional Cardiology sales were up seven percent to $500 million year-on-year, while Peripheral Interventions sales rose 13 percent to $227 million during the third quarter. The MedSurg business climbed 17 percent to $653 million during the period.
Total revenues in the third quarter improved 2.3 percent year-on-year on a reported basis, and increased nine percent on an operational basis, at $1.88 billion, per the Yahoo report. Organic revenue growth, minus sales from the acquisitions of the interventional business of Bayer AG and the American Medical Systems (AMS) male urology portfolio, came in at five percent year-on-year. Geographically, the company reported 10 percent growth in the U.S., nine percent in Europe, nine percent in the Asia, Middle East and Africa (AMEA) region, and 13 percent growth in emerging markets, led by mid-20 percent revenue growth in India, and mid-teens revenue growth in China.
Overall, emerging markets continue to be a challenge, though, as growth rate in the third quarter slowed compared to 2014 performance. However, Mahoney said consistent growth is the important thing, and he is comfortable with the current trend in these markets.
"We continue to invest in additional training centers, we continue to invest in R&D capabilities outside the US, particularly in China and India, and we continue to expand our distribution reach into these key markets," he said during the call. On dealmaking, he said that "we're always looking for appropriate M&A activity. We've guided that we'll continue to lock at tuck-in acquisitions that deliver strong ROIC (return on invested capital) that exceeds our cost of capital ideally by year three."