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Recall will cost Boston Scientific sales

Bloomberg News / April 2, 2010

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Boston Scientific Inc. will lose $469 million in defibrillator sales during the next two years following its recall of the heart-rhythm devices, Wells Fargo Securities analyst Larry Biegelsen estimated. As a result, use of similar devices made by Medtronic Inc. and St. Jude Medical Inc. will increase in 2010 and 2011, Biegelsen said.

Boston Scientific, which is based in Natick, announced March 15 that it had stopped sales of implantable cardiac defibrillators and was voluntarily recalling them because it failed to notify the Food and Drug Administration of two changes to its manufacturing process, as required. The FDA is reviewing paperwork submitted by the company, Karen Riley, an FDA spokeswoman, said.

Some of Boston Scientific’s market share loss may be permanent, “mainly due to lost goodwill with physicians,’’ Biegelsen said in a note to clients this week. The defibrillator problem also “may have a negative spillover effect’’ on the company’s cardiac pacemaker business, he said.

Sales of defibrillators for Medtronic may rise by $278 million in 2010 and 2011, while St. Jude would gain $137 million in sales, Biegelsen said.

Boston Scientific’s defibrillator market share may drop to 21 percent in 2011 from 29 percent in 2009, an analyst at Sanford C. Bernstein & Co. said.