March 17, 2009
Forgive Jim Tobin if he sounds a bit weary. The CEO of Boston Scientific Corp., perhaps the most-maligned medical device company in recent years, has survived a bruising series of product recalls, a market plunge in its signature heart stent and a widely ridiculed $27 billion acquisition of Guidant Corp. that has taken nearly three years to sort out.
Now Tobin, a 38-year veteran of the medical technology industry, has a flailing economy and the Obama health care reform to look forward to. Yet the plain-spoken head of the Natick, Mass.-based medical technology company, which employs about 5,000 people in the Twin Cities, believes he has a story to tell. Part of the storytelling involves stumping before analysts at investors' conferences, like the one held in Boston Tuesday by the investment firm Cowen & Co.
"We're in a different place than we were three years ago, a better place," Tobin said.
A key part of Boston Scientific's story, and one with great pull locally, is the status of the 2006 purchase of Guidant, whose pacemaker and heart defibrillator operations remain in Arden Hills. Although Boston Scientific emerged the victor in a bidding war with rival Johnson & Johnson, it won a business that was crippled by a series of product recalls.
The recalls spooked some doctors and patients, and sales fell. To make matters worse, the Food and Drug Administration (FDA) slapped the division with a warning letter, seen as a serious violation in the med-tech world, claiming its quality systems weren't up to snuff.
Tobin says the issues with the warning letter are resolved, and the division has introduced a series of new products to treat heart disease, including its Cognis and Teligen lines of defibrillators that are thinner and last longer than the competition's.
(That includes Fridley-based Medtronic Inc. and St. Jude Medical Inc. of Little Canada.)
Meanwhile, at the company's cardiovascular division in Maple Grove, sales of the company's blockbuster drug-coated heart stent dampened in 2006 after several studies suggested the artery-clearing device could cause deadly blood clots in some cases. Further, the company faced new competition from Abbott Laboratories and Medtronic.
Today, Tobin says the business has stabilized with the successful launch of its Promus stent (essentially the same product as Abbott's top-selling Xience stent, the result of a licensing agreement) and the second-generation of its Taxus stent, called Liberté. According to the Millennium Research Group, Boston Scientific controlled 50 percent of the drug-coated stent market in February.
In recent years, Tobin has been fairly circumspect with the press, giving few interviews. But at the close of Tuesday's conference, he was almost chatty. Here are excerpts from the conference and his interview with the Star Tribune:
On the Guidant acquisition: "If you dug into our financial projections for 2009 you would see a big chunk of our sales growth and more than all earnings growth comes from products we acquired in the Guidant deal. Guidant is now the engine pulling the train."
On health care reform: "Everybody's for reform as long as it's the other guy who has to reform. I think this time around it has a better shot, maybe 50-50. Boston Scientific is principally a minimally invasive procedure company. Minimally invasive procedures are part of the solution, not the problem."
On medical devices in the economy: Most of what we do seems to be fairly immune to discretionary health care spending. Maybe 5 to 7 percent of what we do you could postpone, but if you need a stent, you could have it either today -- or tomorrow."
On whether he's surprised Medtronic hasn't fared better with its new Endeavor drug-coated stent: "No. Data is my deal, and the data [are] pretty clear. It is probably as safe as the earlier stents, but it does not work as well as the earlier stents. We've been able to make that argument pretty effectively in the marketplace."
On the Supreme Court ruling restricting lawsuits by patients: "I've spent most of my career trying to make as close to perfect products as humanly possible. The goal should be to avoid the problems, so you don't have to worry about people suing you, because they have nothing to sue about."
On whether Medtronic's recall of the Sprint Fidelis defibrillator lead has affected his business: We are gaining [defibrillator] share -- whether it's Fidelis-related or we have better products, I don't know why. I'm a little surprised because Fidelis is a thing of the past, but it's still there and getting worse. There's a lot of angst and anger in the marketplace and among [specialists]. I don't see it going away anytime soon. But it's not my problem."
On whether medical devices will become obsolete in the future: "I'll be dead and gone. I was in the biotech business, I've spent considerable effort trying to understand the possibilities. Gene therapy, cell therapy hold great promise if you look far enough over the horizon. It took us 110 years to figure out how aspirin works."
On whether he's looking at major acquisitions: "We're kind of happy with the company we got. I'm not anxious to go out and do this again. [Laughs.] I'm too old for that."
On whether, at age 64, he plans to retire: "I only have one gear, and it's full speed ahead."
(At which point, the company spokesman interrupts and says, "No comment.")
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