Boston Scientific Likely To Improve Presence In European Coronary Catheter Market

Global medical device maker Boston Scientific (NYSE:BSX) recently reported that it had received CE (Conformité Européenne) approval for its Agent drug-coated balloon (DCB) catheter for the coronary market. The Agent DCB, consisting of Boston Scientific’s Emerge balloon platform with a coating of proven drug Paclitaxel, has been designed to maximize drug transfer efficiency in the treatment of both in-stent restenosis (ISR) and small vessel coronary disease, according to the company. One of the most significant aspects of the Agent DCB is that it has been developed on a relatively small research budget owing to an improvement in R&D efficiency. These efficiency gains were also reflected in the company’s Q2 2014 financial results, where its R&D expenses as a percentage of sales declined by 130 basis points year-over-year (y-o-y). ^{[1] [2] [3]}

We expect the launch of Agent DCB in Europe to help Boston Scientific improve its presence in the coronary heart disease market in the region. There is huge potential for growth in this market considering that coronary heart disease causes an estimated 1.8 million deaths every year in Europe, making it the single most common cause of death in the region. ^[1] We have a price estimate of $13 for Boston Scientific, which is slightly ahead of the current market price.

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Recent IC Division Performance

Drug-Coated balloon catheters are part of the company’s Interventional Cardiology (IC) division, and contribute to its Coronary products business. Interventional Cardiology is the largest division for Boston Scientific, contributing over 28% of the company’s value according to Trefis estimates. It derives its revenues primarily from the sale of coronary stents and catheters. In the past few years, IC sales declined rapidly owing to macroeconomic headwinds and increasing competition. However, the business is turning around on account of improving economic conditions and growing acceptance of new products. In the first half of this year, IC sales grew by a modest 1% y-o-y on a constant currency basis, to just over $1 billion. ^[3]

The company launched a portfolio of drug-eluting stents (DES), including PROMUS Element, Promus PREMIER and SYNERGY, in the IC market last year. The division’s operational sales increase in 2014 so far has been due to strong performance of the Promus PREMIER and SYNERGY DES products. In fact, owing to its strong DES performance, Boston Scientific’s share increased by about 150 basis points in the U.S. DES market during the second quarter this year. The company also gained share in the international DES market on account of strong performance in Europe and the successful launch of PREMIER in Japan.

Going forward, we expect sales to continue to grow, driven by strong uptake of the Promus PREMIER stent system in the U.S., the launch of new products such as Agent DCB, SYNERGY stent and Lotus TAVR, and expansion into Europe, Japan as well as emerging markets. Sales could get a further boost if the company’s Agent DCB gets an FDA (Food and Drug Association) approval for sale in the U.S. The global cardiac catheter market is estimated to reach $8.3 billion by 2016, with both the U.S. and Europe expected to each account for about 28% of the market. ^[4]

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1. Press Release, Boston Scientific, July 23 2014 [↩] [↩]
2. Paclitaxel-Coated Balloon Catheter Versus Paclitaxel-Coated Stent, American Heart Association, April 1 2009 [↩]
3. Boston Scientific Corporation’s CEO Discusses Q2 2014 Results – Earnings Call Transcript, Seeking Alpha, July 24 2014 [↩] [↩]
4. Cardiac Catheters – Global Trends, Estimates and Forecasts, 2012-2018, Market Research, June 30 2014 [↩]