What Will Drive Boston Scientific’s Cardiovascular Business Growth?

by Trefis Team
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We estimate that the Cardiovascular segment constitutes over one-third of Boston Scientific’s (NYSE:BSX) value. This division includes products such as stents and catheters to remove clogging from arteries and helps in restoring blood flow throughout the body, and other devices used to diagnose and treat peripheral vascular and venous diseases. The segment has been doing well in the recent past, primarily led by its Peripheral Intervention products. We forecast this trend to continue in the coming years, led by new drug-eluting stents in the U.S.  We have created an interactive dashboard ~ How Is Boston Scientific’s Cardiovascular Business Trending ~  highlighting the company’s Cardiovascular segment. You can adjust revenue drivers and margins for 2018 and 2019 to see how it impacts the company’s overall revenues, earnings, and price estimate. Below we discuss our expectations and forecasts for the segment.

Expect Cardiovascular Segment Revenue To See Mid-Single Digit Growth In The Coming Years

Boston Scientific’s Cardiovascular segment accounts for roughly 40% of the company’s total revenues and profits. The segment revenues, on average, have grown in mid-single digits over the past few years, primarily led by a strong growth in its Peripheral Intervention products. We forecast the segment revenues to grow in mid-single digits in the coming years to around $5 billion by the end of our forecast period. This growth will be led by both Peripheral Interventions, as well as the Interventional Cardiology business. The company’s new products, pricing growth, and expansion in emerging markets will be the key growth drivers. 

Boston Scientific’s stent business has been trending well, and the company has been focused on new products. There is continued growth in its Synergy, and Promus stents, and it plans to launch new products, such as Eluvia DES, and Ranger DCB in the U.S. In fact, the company received the U.S. FDA approval (premarket) for its Eluvia drug-eluting vascular stent system for the treatment of peripheral artery disease earlier this week. Also, the company last month announced an agreement to acquire Veniti Inc., which has developed Vici nitinol stent system, that is used specifically in the venous anatomy. The regulatory approvals in the U.S. and international expansion of the new products will help the company improve its market share, and aid the segment growth.

The interventional cardiology market is characterized by constant research and development, leading to new and innovative products. Many of these newer products are patent-protected which allows manufacturers to charge premium prices. This should help in overall pricing growth. Looking at the region-wise sales, emerging markets accounted for 10% of the company’s total sales in 2017, representing growth in mid-teens over the prior year.  As the industry has begun to serve demand from markets such as China, India, and Brazil, the revenues will likely see continued growth. It should also be noted that the stent market is highly competitive with a number of companies including Medtronic, and Abbott among others, vying for the same market share. As such, the overall segment revenue growth will likely be capped.

 

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