Boston Scientific Plans Job Cuts

With sales of its top medical devices continuing to drop, Boston Scientific Corp. plans broad job cuts that could affect its Massachusetts employees, a spokesman said yesterday. Executives of the heart-device giant, facing shifts in how doctors treat coronary problems, are planning an extensive restructuring of the company as well as a sell-off of most of its $500 million in stock and other investments. Boston Scientific employs 28,000 people worldwide, including 2,400 in Massachusetts, chiefly at its Natick headquarters, its Marlborough endosurgery division, and a Quincy distribution center. On a conference call with analysts yesterday to discuss second-quarter earnings, new chief financial officer Sam Leno said the company expects to disclose an expense-reduction plan, including job cuts, by year-end. “There is no one business or no one corporate staff function that is being singled out,” he said. Asked about specific effects on local operations, a company spokesman said jobs in Massachusetts “may or may not be affected.” ” We won’t know until the review is completed later this year,” said spokesman Paul Donovan in an interview last night. To help its bottom line and pay down $7.4 billion in net debt, mostly incurred when it bought Guidant Corp. last year, the company is planning to restructure operations, cut the workforce, and sell most of its investment portfolio, both stock and private venture-type holdings. It is also considering a partial initial public offering of its growing endosurgery division. In May, Donovan told the Globe the potential public offering and the asset sell-off would not affect Massachusetts jobs, but did not address restructuring. Yesterday he said the restructuring could have a local impact. Yesterday, Boston Scientific reported a second-quarter profit of $115 million, or 8 cents a share, slightly below consensus Wall Street estimates. That compares to a $4.3 billion loss last year, when the company declared a massive writeoff associated with the Guidant purchase. But the underlying business is struggling, with worldwide sales of its flagship Taxus drug-coated stent sliding more than 30 percent to $437 million from $647 million in the same quarter last year. In the United States the drop was even steeper, more than 40 percent. Sales of implantable defibrillators, the high-tech heart-starting devices it acquired by buying Guidant last year, were $377 million , down slightly from $383 million a year ago. The company’s stock dropped yesterday to its lowest closing price since early April. Shares lost 2.5 percent on the news, dropping 38 cents to close at $14.79. Since extending itself to buy Guidant for $27 billion in April 2006, Boston Scientific has faced challenges on two fronts. One, largely predicted, was the languishing market for the Guidant devices it acquired. Guidant issued multiple recalls over defects in its defibrillators, making patients wary of having the $25,000 devices implanted in their chests. The company recently benefitted from the Food and Drug Administration lifting a warning it had issued on Guidant’s quality control, and Boston Scientific also recently agreed to pay $195 million to settle a class-action lawsuit that encompassed thousands of patients’ claims against Guidant. The second front, however, has thrown a persistent stream of surprises into the company’s path. Its highly profitable Taxus stent, used to keep cleared coronary arteries open, was an industry juggernaut when introduced in 2004, the fastest-selling medical device of all time. But in the past two years, several clinical studies have suggested the drug coating on the stents is linked to a rare but dangerous long-term side effect. Another study, released this spring, found that patients can benefit just as much from medicine, diet, and exercise as from the stenting procedure. SOURCE: Boston Globe