Once-quiet device makers rule life-sciences roost

For years, medical devices took a quiet support role alongside high-flying drug manufacturing and biotechnology industries known for rolling out new $1 billion-a-year products.

Suddenly that's no longer true, especially in Massachusetts, where device-maker Boston Scientific Corp. sits comfortably atop the region's life-sciences pyramid with two products that gross more than $1 billion annually. An industry mainstay, Thermo Electron Corp. of Waltham, is poised to nearly triple in size after it unveiled last week a $10.8 billion bid to take over rival Fisher Scientific International of Hampton, N.H.

The newly combined 30,000-person company will keep headquarters in Waltham.

The industry's growth comes in part because aging American bodies need more of the parts and equipment that the device industry sells, from major joint implants to quick skin-smoothing machines.

But it's also driven by technology that is transforming devices quickly into virtual living pieces of the human body.

Boston Scientific's Taxus stent, for example, not only props open cleared coronary arteries, but remains active in the body, slowly leaking a drug that prevents the artery from reclogging. Its implantable defibrillators, made by newly acquired Guidant Corp., communicate electronically with the heart to keep it from stopping suddenly. And another division sells devices that electrically stimulate the spinal cord to relieve pain.

As medical devices become more complex and valuable, the industry has quietly grown to become a major pillar of the state's economy. Industry trade group MassMedic estimates medical device companies employ 21,000 people and sell $4 billion worth of locally made devices every year, a figure that excludes Boston Scientific's Minnesota-made heart devices.

Although the industry is known for quick obsolescence and ferociously competitive markets, sometimes success comes to those who wait. Aspect Medical Systems Inc., which lost money for the first 17 years of its existence, leaped to number 14 on this year's list with an eye-popping 1,900 percent growth in its profit margin.

How? Research in the past several years has shown that thousands of American surgical patients every year wake during surgery -- conscious but paralyzed, unable to tell doctors they are awake. Aspect produces a brain monitor that can tell operating room doctors whether a patient is conscious. The company sponsored a huge study to show it worked -- and suddenly ''anesthesia awareness" became a medical buzzword, with Aspect offering a solution. Although its revenues of $77 million are dwarfed by Boston Scientific's, the company crossed into profitability at the end of 2004, and anticipates further growth as more hospitals buy its system.

Palomar Medical Technologies Inc. of Burlington is growing due to Americans' increasing appetite for little improvements. It makes ruby laser devices to remove hair and varicose veins and resurface the skin. Revenue grew nearly 40 percent last year.

The Globe 100's 2005 Company of the Year, Boston Scientific, fell to number 48 this year as its profit margin sagged 47.1 percent, mainly because of a $750 million legal settlement of a patent case with ex-business partner Medinol Ltd. Boston Scientific's sales growth also slowed to 11.7 percent last year, from 62 percent a year earlier. The success of the Taxus stent, introduced in 2004, quickly saturated the market for coronary-artery-cleaning procedures, dampening profits.

But this spring, Boston Scientific has put down a $27 billion bet that its purchase of Guidant, an Indianapolis maker of pacemakers and defibrillators, will offer both growing sales and a more balanced revenue stream.

Stephen Heuser can be reached at sheuser@globe.com.