07.22.21
Rank: #11 (Last year: #11)
$9.91 Billion
Prior Fiscal: $10.73 billion
Percentage Change: -7.6%
No. of Employees: 38,000
Global Headquarters: Marlborough, Mass.
KEY EXECUTIVES:
Michael F. Mahoney, Chairman and CEO
Daniel J. Brennan, Exec. VP and CFO
Joseph M. Fitzgerald, Exec. VP and President, Interventional Cardiology
Jeff Mirviss, Exec. VP and President, Peripheral Interventions
Maulik Nanavaty, Sr. VP and President, Neuromodulation
Scott Olson, Sr. VP and President, Rhythm Management
David A. Pierce, Exec. VP and President, MedSurg; President, Endoscopy
Meghan Scanlon, Sr. VP and President, Urology and Pelvic Health
Last November, Boston Scientific began a global, voluntary recall of its Lotus Edge aortic valve system. The company cited “complexities associated with the product delivery system” and the recall was related solely to that. According to the company, the valve continues to achieve positive, clinically effective results and there isn’t a safety issue for patients currently implanted with Lotus Edge.
As a result, the company chose to retire the entire Lotus platform and all related commercial, clinical, R&D, and manufacturing operations.
“While we have been pleased with the benefits the LOTUS Edge valve has provided to patients, we have been increasingly challenged by the intricacies of the delivery system required to allow physicians to fully reposition and recapture the valve,” Boston Scientific chairman and CEO Mike Mahoney told the press. “The complexity of the delivery system, manufacturing challenges, the continued need for further technical enhancements, and current market adoption rates led us to the difficult decision to stop investing in the Lotus Edge platform. We will instead focus our resources and efforts on our ACURATE neo2 Aortic Valve System, Sentinel Cerebral Embolic Protection System and other high growth areas across our portfolio.”
Shortly thereafter, the company notified the state of Minnesota via WARN letter that it would permanently lay off 106 employees—who were part of the Lotus operational unit—at its Maple Grove location beginning Jan. 19 of this year.
A few weeks later, the Beverly Hills-based Schall Law firm filed a class action lawsuit against Boston Scientific accusing the firm of overstating continued Lotus Edge profitability despite it suffering from a defective delivery system. Lawyers alleged the company made false and materially misleading statements, causing investors who bought securities between April 24, 2019, and Nov. 16, 2020, to incur damages.
“We dispute these allegations and will vigorously defend the company against this lawsuit,” Kate Haranis, Boston Scientific's senior manager for corporate PR, said in an emailed statement. No new developments in this lawsuit have come to light at the time of writing.
Also last December, stipulation for dismissal in the California Nevro patent infringement case against the company was filed. Nevro sought preliminary and permanent injunctive relief against further infringement, as well as damages and attorney fees. The case ended with Nevro receiving no relief. Separately, Boston Scientific-initiated patent infringement and trade secret misappropriation cases in Delaware against Nevro have continued, with the first trial scheduled this October.
ANALYST INSIGHTS: While initially hit by COVID, BSC is now rebounding as patients need to return for deferred care during the past year. In the meantime, BSC has continued to be aggressive with M&A to position themselves to be a stronger company on the other side of the pandemic. Expect BSC to continue to be aggressive across its entire portfolio.
In happier news, last April as the pandemic was in its worst U.S. throes, the company began manufacturing a roughly $1,000 emergency resuscitator branded Coventor, authorized by the FDA for use when no other means of mechanical ventilation are available. Working with the University of Minnesota and Medtronic also providing input, the firm helped build a device 7 percent of the ventilator price Philips charged in the U.S. Coventor is the size of a desktop and doesn’t need pressurized oxygen or air supply to operate. Its frame and mechanical actuator stabilize and compress commercially available ventilation bags, which are connected to the patient’s endotracheal tube and external compressed oxygen—or the device can compress ambient air if oxygen is unavailable.
Boston Scientific was atypically quiet in M&A activities last year, no doubt due to continued financial pressures from the pandemic. Last September, the firm began an investment agreement with exclusive option to acquire Farapulse, which develops a pulsed field ablation (PFA) system to treat atrial fibrillation and other arrhythmias. The PFA system earned FDA breakthrough status in May 2019, and Farapulse aims to begin a pivotal U.S. IDE trial and pursue CE mark approval. The PFA system consists of a sheath, generator, and catheters, and ablates heart tissue via a therapeutic electric field, rather than radiofrequency ablation or cryoablation.
The only other M&A activity last year occurred in December. The firm began the sale of its BTG Specialty Pharmaceuticals business for $800 million to Stark International Lux S.A.R.L. and SERB SAS, a European specialty pharmaceutical group. Following the close of the transaction, Boston Scientific will have shed both BTG non-medical device portions after the company bought BTG for $3.7 billion in 2019. The agreement includes the transfer of five facilities and approximately 280 employees.
The COVID-19 pandemic was tough on the Marlborough, Mass.-based device manufacturer. Boston Scientific’s revenue dropped 7.6 percent to $9.91 billion after typically rising year over year.
Endoscopy sales dropped 6 percent from the prior year with $1.8 billion in revenue, driven by declines in elective or semi-emergent upper endoscopy and colonoscopy procedures due to the pandemic environment. This loss was partially reclaimed by growth in the firm’s infection prevention franchise. Urology and pelvic health proceeds fell 9 percent to $1.3 billion due to reduced prosthetic urology and pelvic floor franchise sales as a result of the pandemic environment, partially offset by growth in the prostate health portfolio.
With $1.7 billion in sales, cardiac rhythm management revenue declined 12.1 percent as a result of lower defibrillator and pacemaker procedures brought on by the pandemic.
Last June saw FDA clearance for the LUX-Dx insertable cardiac monitor (ICM). The long-term diagnostic device spots arrhythmias associated with atrial fibrillation (AF), cryptogenic stroke, and syncope. Its dual-stage algorithm—which can be programmed to spot AF, atrial flutter, rhythm pause, bradycardia, and tachycardia episodes—detects, then verifies potential arrhythmias before the alert is sent to a clinician, gathering actionable data. The LUX-Dx ICM’s remote programming ability allows adjustment of detection settings without an in-person appointment.
Electrophysiology proceeds decreased 12.8 percent with $287 million posted last year due to lower sales of mapping and navigation products, as well as core diagnostic and therapeutic devices. This was, once again, due to the pandemic environment causing a deferral of elective electrophysiology procedures.
Last June the firm launched DirectSense technology in the U.S., a tool to monitor radiofrequency energy delivery’s effect during cardiac ablation. Available on the Rhythmia HDx Mapping System, the tool monitors changes in local impedance around the tip of the IntellaNav MiFi OI ablation catheter. It provides data on the impedance around the catheter tip to measure tissue’s ability to respond to RF energy before therapy is delivered, reducing chances of over-ablation and avoiding complications.
Neuromodulation sales also fell 12.8 percent, coming to rest at $761 million. Sales declines in spinal cord stimulation (SCS) systems were the main cause, due to deferral of elective procedures. Higher Superion indirect compression system (gained in the 2019 purchase of Vertiflex) and deep brain stimulation (DBS) sales were able to somewhat offset this franchise’s losses.
European launch of the Vercise Genus DBS system came last September. The full-body, MRI conditional and Bluetooth-enabled implant treats symptoms of Parkinson’s, essential tremor, and dystonia. The firm’s fourth-generation DBS offers the option of abdominal placement and contains programming with integrated visualization via patient imaging thanks to an exclusive relationship with Brainlab. It also touts an option for a 25-year rechargeable battery.
Last September also saw release of the WaveWriter Alpha SCS in Europe. The portfolio consists of four MRI conditional, Bluetooth-enabled implantable pulse generators. The systems feature combination therapy that can layer paresthesia and paresthesia-free options simultaneously with up to 32 contacts to target specific spinal cord nerves to treat chronic, intractable pain. Faster programming while maintaining a distance of 10 feet can be done thanks to the Bluetooth platform. WaveWriter Alpha gained FDA approval last December.
The interventional cardiology business posted $2.3 billion in revenue last year, an 18.4 percent plummet from 2019. The pandemic stifled coronary stent and other percutaneous coronary intervention procedures. Watchman left atrial appendage closure (LAAC) sales were also impacted by COVID-19, and the previously mentioned Lotus Edge recall and discontinuation further hurt the business.
FDA approval for the latest generation of the Watchman FLX LAAC device came last July. The new LAAC treatment device’s new, fully rounded design lets surgeons safely enter and maneuver in the left atrial appendage. It is also the first LAAC device that can be fully recaptured, repositioned, and redeployed. The new frame design promotes optimal device engagement with tissue for long-term stability and a faster, more complete seal. Watchman FLX comes in more sizes than the previous generation, as well.
The Acurate neo2 aortic valve system rolled out in Europe last September. The TAVI technology has expanded indication for aortic stenosis with no specified age or risk level for appropriate candidates. Its new annual sealing technology conforms to irregular, calcified anatomies to further minimize paravalvular regurgitation. The delivery system simplifies smaller and complex vessel access, and allows accurate valve positioning. Top-down deployment supports stable placement and release, as well.
Peripheral interventions revenue posted the only gain within any franchise, rising 13.3 percent to $1.6 billion. The interventional oncology franchise was the main driver, including TheraSphere Y-90 radioactive glass microspheres acquired from BTG.
The Ranger drug-coated balloon achieved FDA approval last November to treat peripheral artery disease in the superficial femoral artery and proximal popliteal artery. Its low therapeutic drug dose and proprietary coating helps with high primary patency rates and low systemic drug exposure. Its low-profile design also helps perform streamlined procedures and navigate through challenging anatomy.
Specialty pharmaceuticals accrued $219 million last year. The transaction to sell the business is expected to take place during the middle of this year.
$9.91 Billion
Prior Fiscal: $10.73 billion
Percentage Change: -7.6%
No. of Employees: 38,000
Global Headquarters: Marlborough, Mass.
KEY EXECUTIVES:
Michael F. Mahoney, Chairman and CEO
Daniel J. Brennan, Exec. VP and CFO
Joseph M. Fitzgerald, Exec. VP and President, Interventional Cardiology
Jeff Mirviss, Exec. VP and President, Peripheral Interventions
Maulik Nanavaty, Sr. VP and President, Neuromodulation
Scott Olson, Sr. VP and President, Rhythm Management
David A. Pierce, Exec. VP and President, MedSurg; President, Endoscopy
Meghan Scanlon, Sr. VP and President, Urology and Pelvic Health
Last November, Boston Scientific began a global, voluntary recall of its Lotus Edge aortic valve system. The company cited “complexities associated with the product delivery system” and the recall was related solely to that. According to the company, the valve continues to achieve positive, clinically effective results and there isn’t a safety issue for patients currently implanted with Lotus Edge.
As a result, the company chose to retire the entire Lotus platform and all related commercial, clinical, R&D, and manufacturing operations.
“While we have been pleased with the benefits the LOTUS Edge valve has provided to patients, we have been increasingly challenged by the intricacies of the delivery system required to allow physicians to fully reposition and recapture the valve,” Boston Scientific chairman and CEO Mike Mahoney told the press. “The complexity of the delivery system, manufacturing challenges, the continued need for further technical enhancements, and current market adoption rates led us to the difficult decision to stop investing in the Lotus Edge platform. We will instead focus our resources and efforts on our ACURATE neo2 Aortic Valve System, Sentinel Cerebral Embolic Protection System and other high growth areas across our portfolio.”
Shortly thereafter, the company notified the state of Minnesota via WARN letter that it would permanently lay off 106 employees—who were part of the Lotus operational unit—at its Maple Grove location beginning Jan. 19 of this year.
A few weeks later, the Beverly Hills-based Schall Law firm filed a class action lawsuit against Boston Scientific accusing the firm of overstating continued Lotus Edge profitability despite it suffering from a defective delivery system. Lawyers alleged the company made false and materially misleading statements, causing investors who bought securities between April 24, 2019, and Nov. 16, 2020, to incur damages.
“We dispute these allegations and will vigorously defend the company against this lawsuit,” Kate Haranis, Boston Scientific's senior manager for corporate PR, said in an emailed statement. No new developments in this lawsuit have come to light at the time of writing.
Also last December, stipulation for dismissal in the California Nevro patent infringement case against the company was filed. Nevro sought preliminary and permanent injunctive relief against further infringement, as well as damages and attorney fees. The case ended with Nevro receiving no relief. Separately, Boston Scientific-initiated patent infringement and trade secret misappropriation cases in Delaware against Nevro have continued, with the first trial scheduled this October.
ANALYST INSIGHTS: While initially hit by COVID, BSC is now rebounding as patients need to return for deferred care during the past year. In the meantime, BSC has continued to be aggressive with M&A to position themselves to be a stronger company on the other side of the pandemic. Expect BSC to continue to be aggressive across its entire portfolio.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
In happier news, last April as the pandemic was in its worst U.S. throes, the company began manufacturing a roughly $1,000 emergency resuscitator branded Coventor, authorized by the FDA for use when no other means of mechanical ventilation are available. Working with the University of Minnesota and Medtronic also providing input, the firm helped build a device 7 percent of the ventilator price Philips charged in the U.S. Coventor is the size of a desktop and doesn’t need pressurized oxygen or air supply to operate. Its frame and mechanical actuator stabilize and compress commercially available ventilation bags, which are connected to the patient’s endotracheal tube and external compressed oxygen—or the device can compress ambient air if oxygen is unavailable.
Boston Scientific was atypically quiet in M&A activities last year, no doubt due to continued financial pressures from the pandemic. Last September, the firm began an investment agreement with exclusive option to acquire Farapulse, which develops a pulsed field ablation (PFA) system to treat atrial fibrillation and other arrhythmias. The PFA system earned FDA breakthrough status in May 2019, and Farapulse aims to begin a pivotal U.S. IDE trial and pursue CE mark approval. The PFA system consists of a sheath, generator, and catheters, and ablates heart tissue via a therapeutic electric field, rather than radiofrequency ablation or cryoablation.
The only other M&A activity last year occurred in December. The firm began the sale of its BTG Specialty Pharmaceuticals business for $800 million to Stark International Lux S.A.R.L. and SERB SAS, a European specialty pharmaceutical group. Following the close of the transaction, Boston Scientific will have shed both BTG non-medical device portions after the company bought BTG for $3.7 billion in 2019. The agreement includes the transfer of five facilities and approximately 280 employees.
The COVID-19 pandemic was tough on the Marlborough, Mass.-based device manufacturer. Boston Scientific’s revenue dropped 7.6 percent to $9.91 billion after typically rising year over year.
Endoscopy sales dropped 6 percent from the prior year with $1.8 billion in revenue, driven by declines in elective or semi-emergent upper endoscopy and colonoscopy procedures due to the pandemic environment. This loss was partially reclaimed by growth in the firm’s infection prevention franchise. Urology and pelvic health proceeds fell 9 percent to $1.3 billion due to reduced prosthetic urology and pelvic floor franchise sales as a result of the pandemic environment, partially offset by growth in the prostate health portfolio.
With $1.7 billion in sales, cardiac rhythm management revenue declined 12.1 percent as a result of lower defibrillator and pacemaker procedures brought on by the pandemic.
Last June saw FDA clearance for the LUX-Dx insertable cardiac monitor (ICM). The long-term diagnostic device spots arrhythmias associated with atrial fibrillation (AF), cryptogenic stroke, and syncope. Its dual-stage algorithm—which can be programmed to spot AF, atrial flutter, rhythm pause, bradycardia, and tachycardia episodes—detects, then verifies potential arrhythmias before the alert is sent to a clinician, gathering actionable data. The LUX-Dx ICM’s remote programming ability allows adjustment of detection settings without an in-person appointment.
Electrophysiology proceeds decreased 12.8 percent with $287 million posted last year due to lower sales of mapping and navigation products, as well as core diagnostic and therapeutic devices. This was, once again, due to the pandemic environment causing a deferral of elective electrophysiology procedures.
Last June the firm launched DirectSense technology in the U.S., a tool to monitor radiofrequency energy delivery’s effect during cardiac ablation. Available on the Rhythmia HDx Mapping System, the tool monitors changes in local impedance around the tip of the IntellaNav MiFi OI ablation catheter. It provides data on the impedance around the catheter tip to measure tissue’s ability to respond to RF energy before therapy is delivered, reducing chances of over-ablation and avoiding complications.
Neuromodulation sales also fell 12.8 percent, coming to rest at $761 million. Sales declines in spinal cord stimulation (SCS) systems were the main cause, due to deferral of elective procedures. Higher Superion indirect compression system (gained in the 2019 purchase of Vertiflex) and deep brain stimulation (DBS) sales were able to somewhat offset this franchise’s losses.
European launch of the Vercise Genus DBS system came last September. The full-body, MRI conditional and Bluetooth-enabled implant treats symptoms of Parkinson’s, essential tremor, and dystonia. The firm’s fourth-generation DBS offers the option of abdominal placement and contains programming with integrated visualization via patient imaging thanks to an exclusive relationship with Brainlab. It also touts an option for a 25-year rechargeable battery.
Last September also saw release of the WaveWriter Alpha SCS in Europe. The portfolio consists of four MRI conditional, Bluetooth-enabled implantable pulse generators. The systems feature combination therapy that can layer paresthesia and paresthesia-free options simultaneously with up to 32 contacts to target specific spinal cord nerves to treat chronic, intractable pain. Faster programming while maintaining a distance of 10 feet can be done thanks to the Bluetooth platform. WaveWriter Alpha gained FDA approval last December.
The interventional cardiology business posted $2.3 billion in revenue last year, an 18.4 percent plummet from 2019. The pandemic stifled coronary stent and other percutaneous coronary intervention procedures. Watchman left atrial appendage closure (LAAC) sales were also impacted by COVID-19, and the previously mentioned Lotus Edge recall and discontinuation further hurt the business.
FDA approval for the latest generation of the Watchman FLX LAAC device came last July. The new LAAC treatment device’s new, fully rounded design lets surgeons safely enter and maneuver in the left atrial appendage. It is also the first LAAC device that can be fully recaptured, repositioned, and redeployed. The new frame design promotes optimal device engagement with tissue for long-term stability and a faster, more complete seal. Watchman FLX comes in more sizes than the previous generation, as well.
The Acurate neo2 aortic valve system rolled out in Europe last September. The TAVI technology has expanded indication for aortic stenosis with no specified age or risk level for appropriate candidates. Its new annual sealing technology conforms to irregular, calcified anatomies to further minimize paravalvular regurgitation. The delivery system simplifies smaller and complex vessel access, and allows accurate valve positioning. Top-down deployment supports stable placement and release, as well.
Peripheral interventions revenue posted the only gain within any franchise, rising 13.3 percent to $1.6 billion. The interventional oncology franchise was the main driver, including TheraSphere Y-90 radioactive glass microspheres acquired from BTG.
The Ranger drug-coated balloon achieved FDA approval last November to treat peripheral artery disease in the superficial femoral artery and proximal popliteal artery. Its low therapeutic drug dose and proprietary coating helps with high primary patency rates and low systemic drug exposure. Its low-profile design also helps perform streamlined procedures and navigate through challenging anatomy.
Specialty pharmaceuticals accrued $219 million last year. The transaction to sell the business is expected to take place during the middle of this year.