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J&J to cut back on stent business

By Associated Press
June 16, 2011

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TRENTON, N.J. — Johnson & Johnson, which pioneered drug-coated stents for heart patients, is ceding the territory to rivals whose newer, better products have been squeezing its market share for years.

Amid intensifying competition and declining total stent sales, the health care giant said yesterday its Cordis business will get out of heart stents and instead will focus on areas such as diagnostics and stents for blood vessels outside the heart.

At the same time, J&J will cut hundreds of jobs, shutter two factories, and take a charge of $500 million to $600 million in the current quarter as it restructures Cordis.

Cypher had been the market leader, but its market share fell from a 2006 peak of 51 percent to 16 percent last year, as sales plunged from about $2.6 billion to just $627 million over that time. Meanwhile, rivals Abbott Laboratories, Boston Scientific Corp., and Medtronic Inc. introduced new stents widely perceived as better than Cypher and grabbed customers, and the increasing competition forced down prices.

Stents, wire-mesh tubes used to hold arteries open after they are surgically cleared of fatty plaque, were the hot option for patients with clogged arteries in the 1990s and the first half of the last decade.

Cypher and other newer-generation stents, coated with drugs to prevent scar tissue from forming over the tube and eventually re-narrowing the artery, supplanted the original bare-metal ones and sales jumped.

But the medical consensus has changed as studies indicated many patients would do just as well by taking medicines to prevent heart attack or stroke and skipping the expensive, although minimally invasive, procedure to insert a stent. That’s cut into sales, along with a recession and slow recovery that’s left many unemployed, uninsured patients unable to afford a stent procedure.

So J&J, based in New Brunswick, N.J., said Cordis will stop making Cypher and Cypher Select drug-coated stents by year end. It will also stop development of a successor drug-coated stent called Nevo.

J&J shares fell 94 cents to $66.16 as the broader markets declined. Boston Scientific, a smaller company more dependent on stents, jumped 2.8 percent to $6.93. Boston Scientific is based in Natick, Mass.

“This is the right decision, to take resources out of an area where they’ve lost a lot of market share and put it into an area where they can be more competitive,’’ said Edward Jones analyst Linda Bannister.

Analysts expect Boston Scientific and Abbott, which each have just over 35 percent of the market, to pick up most of J&J’s share.