J&J buys new-generation stent maker

In an effort to create a more powerful rival to Boston Scientific Corp., healthcare giant Johnson & Johnson said late Thursday night it would pay $1.4 billion for Conor Medsystems Inc. of California, developer of a new-generation stent to repair coronary arteries.

Conor does not have a stent on the market in the United States, but the cash deal is aimed at changing the future landscape of the $5 billion stent industry, in which Johnson & Johnson is Boston Scientific's chief competitor.

Stents are tiny mesh tubes implanted in heart arteries to keep them open after angioplasty procedures. The highly profitable stents sold by Boston Scientific of Natick and Johnson & Johnson of New Jersey are coated with a drug-polymer mixture that slowly leaks into the bloodstream to prevent scarring.

Conor is the first company to develop a type of stent in which the drug does not coat the stent, but rather dissolves out of tiny wells in the device's surface, potentially reducing some safety risks associated with the drug coatings.

The Conor stent has already been approved in Europe, where sales have been modest. In the United States, Conor is still testing the device and expects to apply for approval early next year. Conor is also testing a stent that dispenses two different drugs.

New products are crucial for medical device companies, which depend on a constant stream of innovation to compete and grow. Currently, Boston Scientific is blocked from introducing its next-generation stent because the Food and Drug Administration has placed the company under a warning for problems in its quality control systems. Johnson & Johnson's stent-making division, which received a warning over its manufacturing process, is also blocked from introducing new products.

Boston Scientific expects to begin introducing new stents after its warning is lifted. It is also developing technology acquired when it bought Guidant Corp. earlier this year, including a dissolving stent. For Johnson & Johnson, analysts say the Conor purchase is a way to jumpstart development of new products.

"They needed something to kind of shake things up," said analyst Thomas Gunderson of Piper Jaffray & Co.

Gunderson calls the Conor stent "very interesting technology," but points out that it has not undergone the long-term effectiveness and safety testing of stents on the market.

Besides accelerating a rivalry in the stent market, the acquisition also adds another strand to the complex web of lawsuits between Boston Scientific and Johnson & Johnson, each of which is suing the other for patent infringement over its stents. Boston Scientific is also suing Conor Medsystems in several countries over its stent design and drug coating, which uses a similar drug to that on Boston Scientific's Taxus stent.

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