Boston Scientific needs to grow faster than overall markets, new CEO Mike Mahoney says
Facing sluggish conditions in its largest businesses, Boston Scientific Corp. plans to grow faster than the overall market, take share from competitors, and expand into faster growing niches, its top executive told investors Tuesday morning.
Mike Mahoney, who joined the Natick-based medical device maker in 2011 and was elevated to chief executive last November, outlined his strategy at a New York meeting with stock analysts that was webcast to the company’s investors.
“We really do see this as a new era for the company,” Mahoney said. “Clearly these are challenging markets, but they are the markets we have to compete in. We believe that the innovations in the portfolio that we have will improve patients’ lives.”
Mahoney said the markets Boston Scientific serves – notably its interventional cardiology and cardiac rhythm management segments, which account for almost 60 percent of sales – shrunk 1 percent in 2012 after growing 3 percent in 2010. At the same time, the company’s revenue slipped to $7.2 billion from $7.8 billion in that period as it lost ground to rivals.
Going forward, Mahoney said Boston Scientific’s core markets should stabilize this year, grow 2 percent by 2015 and 4 percent by 2017. He said the company will have to outpace that slow growth while boosting its business in faster growing adjacent markets such as endoscopy, urology, and women’s health.
Beyond those areas, Boston Scientific will be rolling out new products to treat severe asthma, hypertension, atrial fibrillation, and other conditions, Mahoney said.
Mahoney acknowledged the company faces strong headwinds, including a new federal medical device tax that will help pay for President Obama’s health care overhaul. That tax should cost Boston Scientific about $75 million this year, he estimated.
But the company also has some trends moving in its favor, Mahoney said, including an aging population, an expanding product line, and strong growth in emerging markets such as China, India, Brazil, and Russia. Those markets accounted for just 4 percent of Boston Scientific revenue last year but should make up 10 percent of sales by 2017, he said.
“We really are acting like a global company now,” Mahoney said.
Boston Scientic has eliminated more than 1,000 jobs over the past three years, and last month, it said it planned to cut another 900 to 1,000 worldwide as part of an ongoing restructuring of operations. The company now has about 24,000 employees globally, including between 2,000 and 3,000 in Massachusetts, where it is planning to sell its Natick headquarters complex and move its home office to a campus in nearby Marlborough.
Mahoney hinted Tuesday that there may still be further cuts in his efforts to create a streamlined and faster-moving company.
“We still believe there’s a lot of room for Boston Scientific to become leaner,” he said.Robert Weisman can be reached at email@example.com.