Abbott, Medtronic stent sales may rise on study
WASHINGTON - Abbott Laboratories and Medtronic Inc. are poised to seize a third of the $5 billion in annual heart-stent sales with new versions of the drug-coated devices.
Studies suggest Abbott and Medtronic stents are more effective than artery-opening products sold by market leaders Johnson & Johnson and Boston Scientific Corp. Abbott's new Xience stent may become the top seller because of superior technology, according to Samin Sharma, director of interventional cardiology at Mount Sinai Medical Center, who implants more stents than any other New York doctor.
But not all is rosy at the world's largest maker of heart devices. Medtronic is feeling the pinch of a slowdown in one of its key markets and will eliminate about 900 jobs, or about 2.4 percent of its workforce, generating annual savings of $125 million, according to a government filing.
Of those positions, 349 had been cut as of July 27.
The job cuts will be realized through early retirement, voluntary and involuntary separations, and substantially completed by the end of its fiscal year in April 2008, the filing said.
Medtronic had revenue of $12.3 billion last year and employs over 37,000 people worldwide.
The company also makes vascular products, insulin pumps, and artificial spinal discs, but its biggest market is for products that manage irregular heartbeats, such as pacemakers and ICDs.
The ICD market has slowed dramatically since 2005 following a wave of product recalls, mostly by Guidant Corp., which was acquired by Boston Scientific.
A Medtronic spokeswoman said about 500 jobs will be eliminated from the cardiac rhythm management business, which makes ICDs, and roughly 200 will be cut from its cardiovascular business, which makes stents and catheters. An additional 200 will be eliminated from its Physio-Control unit, which makes external defibrillators and will be spun off as an independent company.
By 2009, Abbott and Medtronic will each be selling about $1 billion a year of drug-coated stents, preferred by doctors because they keep arteries open longer. The Xience is forecast to account for 8 percent of Abbott's operating profit, Lehman Brothers analyst Robert Hopkins said Wednesday in an investment note.
"It's going to be quite a land grab," said Phil Nalbone, a medical device analyst at RBC Capital Markets in San Francisco. "We have a new generation of stents that are easier to use and may have significant advantages in effectiveness and safety."
Abbott introduced the Xience device last year in Europe as its first entry in the drug-coated stent market.
Medtronic's Endeavor stent, available in Europe, is its first drug-coated version. Last year, Medtronic generated $276 million from Endeavor and $249 million from bare-metal devices costing about $300, a 10th as much as drug-coated stents.
Boston Scientific has plummeted 23 percent in trading since studies linked its Taxus stents to blood clots at a cardiology meeting a year ago in Europe. Boston Scientific plans to introduce its next-generation Taxus Liberte stent next year in the United States.
Johnson & Johnson gets less than 5 percent of its sales from stents.
