Boston Scientific Corporation (Boston Scientific) provides revenue guidance for the year 2009. For the period, company now expects 38% of its revenue will come from new products, with the cardiac rhythm management (CRM) business to be the engine of growth for the near term based on new product flow.
Jim Tobin its chief executive officer (CEO) said the company is nowhere near as dependent as it had been on its Taxus drug-coated stent business, which has seen growth stall amid stiff competition and studies that suggested the devices used to prop open arteries that have been cleared of plaque could cause dangerous blood clots.
“Our business mix has shifted majorly from where we were three or four years ago. We are much better diversified,” Tobin told investors at the JP Morgan Healthcare conference in San Francisco.
“We are in a position where we expect the CRM business to be the engine of growth for the near term based on new product flow,” he said of the business unit that sells devices to control heart rhythms, such as pacemakers and implantable defibrillators.
“Over the last three years we have completely overhauled the business,” he said.
One progress milestone that might embarrass some companies but was clearly a point of pride for Boston Scientific was Tobin’s noting of the recent passing of a one-year anniversary without a product recall.
“We had to change a lot,” Tobin admitted.
Tobin said its new Promus stent was “holding its own” with Abbott Laboratories Inc’s (ABT.N) extremely successful and identical Xience stent, both of which were launched in July.
As part of its $27 billion, 2006 acquisition of Guidant, Boston Scientific sold Guidant’s stent business to Abbott, but retained the right to sell Xience under the Promus brand name with 40% of the profit going to Abbott.
A next generation stent called Promus Element will fully belong to Boston Scientific. That product is on track for launch in Europe this year, with a mid-2012 launch planned for the United States after a clinical trial that could begin as soon as this month, Tobin said.
“Promus is not as profitable as Taxus, but it will be some day,” Tobin promised, pointing to the U.S. Element launch.
He noted with some frustration that it has only been over the last few months “that we have been able to sell all that stuff that we spent all that money on to buy Guidant.”
With the Guidant purchase came a heavy debt burden. But Tobin said the company is in a strong financial position, with cash flow of more than $100 million a month, “which is a big deal in this day and age.”
He said the company has been able to pay down debt faster than it thought it could.
Tobin said Boston Scientific’s next debt payment is not due until April of 2010, “but we could write the check for that right now if we wanted to.”