Great news for SOTK as it is a supplier of batch-coating equipment for drug-eluting stents:
The New York Times - Market Place
Street Expresses New Confidence in Drug-Coated Stents
By BARNABY J. FEDER
Published: December 28, 2006
WALL STREET’S fears of a steep decline in the $6 billion stent business seem to have evaporated after an inconclusive federal regulatory review of coronary stent safety this month. Might the optimism be premature?
In their relief, analysts are now forecasting that the lucrative drug-coated versions of the stents, which prop open heart arteries, will still account for 75 percent to 80 percent of the domestic stent market in the last quarter of this year. That would be down from about 88 percent a year ago.
But analysts see it as a relatively strong performance in the face of many months of troubling headlines about potentially deadly clotting risks in a small percentage of them.
While the Food and Drug Administration’s safety panel did suggest that heart doctors take various measures to reduce the risks associated with the stents, it did not call for the agency to impose new restrictions on their use.
As a result, Wall Street is looking for the sales slide to end in 2007. Indeed, some analysts speculate that a rebound may already have begun.
“None of the physicians we spoke with have or will change their behavior, suggesting that market share and penetration may be stable or, perhaps, on the upswing,” Jan D. Wald, an analyst at A. G. Edwards, wrote in a recent note to investors on the effect of the F.D.A. hearings.
Glenn J. Novarro, an analyst at Banc of America Securities, was a bit more pessimistic in his forecast, indicating that the drug-coated stent share of the United States market could fall to a low of 72.5 percent next spring before rebounding. But, he told clients that he has not revised downward his projection of an 81 percent share for the drug-coated devices in 2008.
Some of the rebound might come from the expected arrival in the market in the second half of next year of Medtronic’s drug-coated Endeavor stent. But the biggest winner from a rebound would probably be Boston Scientific, the domestic market leader.
Boston Scientific became a major player in implantable defibrillators and reduced its dependence on Taxus, its blockbuster drug-coated heart stent, with its acquisition last spring of Guidant. But Taxus still accounts for well over 25 percent of sales and an even larger share of profits.
What if the current confidence in the drug-coated stent market is wrong?
How far might drug-coated stent use fall if doctors become much more cautious about implanting the devices, which cost roughly $2,200 each? That’s nearly three times as much as the bare-metal devices they have largely supplanted.
Stents are used to improve angioplasty, a procedure in which a balloon is inflated to clear a blockage in an artery. Stents were introduced to reduce the frequency with which cleared arteries quickly reclogged. Drug-coated stents have been roughly twice as effective at halting such reclogging, which allows more patients to avoid return visits to the hospital to reopen the artery.
But serious complications from procedures to reopen arteries are rare. Thus, even a slight increase in deadly clotting from the newer stents might be seen as a risk outweighing the benefit of fewer follow-up procedures.
Consider what happened in Sweden, a nation that keeps centralized records on every stent implant. Swedish use of drug-coated stents topped 62 percent at the end of 2005. Some Swedish hospitals used such stents in nearly 90 percent of the angioplasties where stents were implanted.
Then, as reports from many nations began circulating that clots were developing in the drug-coated stents months or even years after they were implanted — a problem rarely seen in bare-metal stents — hospitals began switching back to bare metal.
The switching accelerated in September after a cardiology conference in Spain that spotlighted the accumulating data. Sweden’s own data also showed slightly higher clotting rates after six months in patients that got drug-coated stents. By the end of October, the drug-coated devices were being used in just 25 percent of angioplasty cases — and just over 30 percent of the cases where a stent was used.
Dr. Lars Wallentin, a cardiologist from Uppsala, Sweden, who flew to Washington to share the Swedish data with the F.D.A. panel this month, said that the Swedish media had overreacted by labeling the drug-coated devices “death stents.”
But Dr. Wallentin said that the current use of the devices seems appropriate for now. He said Swedish studies, like some in the United States, showed higher risks associated with using drug-coated devices in patients with more complicated blockages and health problems than the patients studied in clinical trials for the devices. As in the United States, most patients getting the stents have been in such “off-label” groups.
Even cardiologists who are outspoken critics of stent practices in the United States, like Dr. Sanjay Kaul of Cedars-Sinai Medical Center in Los Angeles, argue that the medically justified usage of drug-coated stents is somewhat higher than current levels in Sweden.
But opinions vary widely. Dr. Kaul says clinical data supports use of drug-coated stents in perhaps 40 percent of angioplasty cases. But stent advocates with close ties to the industry, like Dr. Gary S. Roubin at Lenox Hill Hospital in New York, say use should actually rise from current levels.
Boston Scientific would be hit by a 17.5 percent shortfall in projected earnings per share next year if drug-coated stents fell to 40 percent of the domestic market, according to Lawrence Biegelsen of the Prudential Equity Group. A similar decline would nick just 1.3 percent from the earnings per share of Johnson & Johnson, the diversified health care giant that makes the only other drug-coated device currently sold in the United States.
It seems farfetched that drug-coated stents could fall that far. Unless, of course, there is more bad news about clotting risks.
