REBEL Bare Metal Stent Could Be A $200 Million Opportunity For Boston Scientific

Global medical device maker Boston Scientific (NYSE:BSX) received CE approval for its REBEL Platinum Chromium coronary stent system last week, paving the way for its sale in Europe. The REBEL bare metal stent is similar to the company’s drug-eluting PROMUS Premier stent system, but without Everolimus – a biological therapy drug that treats advanced kidney cancer, advanced breast cancer and advanced pancreatic cancer. ^[1] It caters to patients with coronary arterial disease who, for various reasons, are not eligible for the use of drug-eluting stents. ^[2]

Coronary stent sales contribute significantly to Boston Scientific’s largest business division, interventional cardiology (IC). The company’s IC sales and market share have suffered for the past few years due to certain performance issues with its drug-eluting stents and increasing competition from rivals such as Medtronic (NYSE: MDT) and Abbott Labs (NYSE:ABT). The company launched a portfolio of new products including PROMUS Element, Promus PREMIER and SYNERGY last year in a bid to improve declining sales and regain lost share in the interventional cardiology market. The launch of the REBEL stent in the European market can be seen as a continuation of the company’s efforts in this direction.

We currently have a price estimate of about $12.50 for Boston Scientific, implying a slight discount to the market price.

See our full analysis for Boston Scientific

$200 Million Opportunity

According to BCC Research, the global coronary stent market was valued at about $7.1 billion in 2011. ^[3] Of this, drug-eluting stents contributed around 55%-60%, with bare metal stents accounting for the most of the remainder (with bio-absorbable stents having a very small share). Assuming that the market for drug-eluting stents and bare metal stents grew at a CAGR (compound annual growth rate) of 9.5% and 2%, respectively, for the following three years, we estimate that the global coronary stent market will be valued at around $9 billion in 2014. ^[4]

In terms of geographical distribution, the Americas contribute about 40% of global revenues in this market, closely followed by Europe at 35%-37%. ^[3] Therefore, Boston Scientific’s REBEL bare metal stent, which is now available for sale in Europe, will be competing in a market valued at about $1.2-1.4 billion in 2014.

Boston Scientific currently has a share of about 15% in the global interventional cardiology market, which includes the coronary stent market. If it can grab a similar share in the European bare metal stent market, currently dominated by established players such as Johnson & Johnson (NYSE:JNJ), Medtronic and Abbott Labs, with its REBEL product, it could be a $200 million annual revenue opportunity for the company.

Other New Coronary Stent Products

Boston Scientific has been remodelling its product portfolio since last year for the global interventional cardiology market. Here is a look at some of the promising new stents launched by the company in 2013:

SYNERGY Stents: SYNERGY is a next-generation stent that dissolves inside the body within three months. It received CE approval in Europe in Q4 2012 and has shown impressive uptake despite its premium price. In the U.S, the device is currently being clinically tested and is expected to be rolled out in 2015-2016. Based on its performance in Europe, we expect SYNERGY to also perform well in the U.S. once it is launched.

PROMUS Stents: Boston Scientific earlier sourced the PROMUS drug-eluting stents from Abbott Labs. However, the company has now started producing them in house, which has had a positive impact on its gross margins. Boston Scientific also has an advanced version, PROMUS Premier, that received CE approval in Europe in Q1 2013 and FDA approval in the U.S. in Q4 2013.

Given their performance in the last couple of quarters, we expect PROMUS and SYNERGY to continue growing in the next few years and stem the decline in Boston Scientific’s IC market share.

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1. Cancer Research UK [↩]
2. Press Release, Boston Scientific, March 14 2014 [↩]
3. Global Markets for Coronary Stent Devices, BCC Research, February 2012 [↩] [↩]
4. Global Coronary Stents Market, PRWeb, September 11 2013 [↩]