Boston Scientific Shares Surge as Rival Guidant Suffers Manufacturing Setback

Strategic Insights -

Boston Scientific Corp., a medical devices company, saw its shares rise by 11% yesterday, reaching a market capitalization of $37.4 billion, after its rival Guidant Corp. disclosed a manufacturing issue that may set back its development schedule by up to six months. The setback occurred when Guidant revealed that it may need to redesign its Champion drug-coated stent to account for problems with its stainless steel base platform. This news has significant implications for Guidant, as it will need to redesign and re-test its stent, which could delay its launch. In contrast, Boston Scientific's drug-coated stent, Taxus, has been gaining popularity, capturing 75% of the market share in its competition with Johnson & Johnson's Cypher stent.

Key Takeaways:

  • Boston Scientific shares rose by 11% yesterday, reaching a market capitalization of $37.4 billion.
  • Guidant Corp. disclosed a manufacturing issue that may set back its development schedule by up to six months.
  • Guidant may need to redesign its Champion drug-coated stent to account for problems with its stainless steel base platform.
  • Boston Scientific's Taxus stent has captured 75% of the market share in its competition with Johnson & Johnson's Cypher stent.
  • Paul A. LaViolette, Boston Scientific senior vice president, stated that the company has been able to compete with Cypher stents without lowering prices significantly.
  • Taxus stents sold for $2,598 each during the third week of May, compared with $2,620 in the first half of April.

Statistics:

  • Boston Scientific's shares rose by 11% yesterday, adding $769.7 million to the net worth of the company's cofounder and chairman Peter M. Nicholas.
  • Guidant Corp.'s shares fell $6.78 to close at $53.71.
  • Boston Scientific's market capitalization reached $37.4 billion, making it the most valuable life sciences firm in Massachusetts.
  • Taxus stents have captured 75% of the market share in their competition with Cypher stents.

Sources:

  • The Boston Globe, May 27
  • Boston.com/globe
  • Knight Ridder/Tribune Business News
  • Republished by Knight Ridder/Tribune Business News.