Boston Scientific: An Acquiror Once More
Once an aggressive buyer of promising device technology, Boston Scientific's recent difficulties relegated it to the M&A sidelines; the company is back with a new string of acquisitions but a different gameplan.
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Boston Scientific CEO Jim Tobin, in a series of addresses, defends his company's decision to spend $27.3 billion on Guidant Inc., warts and all. Defying criticism of the deal, Tobin lays out how Boston Scientific management corrected Guidant's problems--and why the new company will thrive.
This month's $115 million cash deal to acquire electrophysiology company Cardiac Pathways Corp., makes five acquisitions for Boston Scientific already this year. Boston's dealmaking flurry is particularly notable given the relative inactivity of other large device companies on the acquisition front, and the cold shoulder the public market has given to the device sector. This deal reflects Boston's renewed commitment to electrophysiology, an area the company was thinking about exiting just a couple of years ago despite having a market-leading product. But it still remains to be seen whether this recent string of deals can turn around Boston Scientific and boost its flagging stock price.
At this year's Paris Course on Revascularization (PCR), the leading European interventional meeting, embolic protection devices (EPDs) were among the prime subjects, in terms of clinical presentations and company exhibits. Some industry executives had predicted that Medtronic's acquisition last fall of PercuSurge would end the competitive race in this market before it really began. But judging by both the newer companies at the PCR and other recent entrants into this space, it appears that the battle has just begun. There are around 14 companies now competing in this space, six of which have received CE mark. Since none of these companies is on the US market, the initial competitive battle will be fought in Europe. Each of the major cardiology companies has already gotten into this area, generally through acquisitions. But there are also several start-ups that have come up with new technological approaches that are receiving favorable initial clinical reviews, so the debate remains open as to which of three approaches--occlusion balloons, filters, or proximal occlusion/reverse flow systems will ultimately prevail.