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Pharma's Market
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Chitose Suzuki / AP Boston Scientific Corp. |
Not too long ago, some had written off the potential for significant growth to resume in sales of the little wire mesh tubes that are painted with special drugs to help keep arteries from reclogging. The devices were plagued by safety concerns regarding blood clots forming several months or years after they were put in.
There are now four players in the space and Weinstein is telling clients that the latest entrant, the Xience stent from Abbott[ABT
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], is quickly emerging as the dominant product. Boston Scientific [BSX
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]sells the exact same stent, but under the brand name Promus. Weinstein says that Xience/Promus are already approaching 50 percent market share. "The speed of the shift is fascinating to watch, as cardiologists who just a few months ago were telling us that they would initially use Xience in only a quarter of their procedures are now apparently making it their lead product," he writes.
Medtronic [MDT
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]won approval earlier this year of its drug-coated stent Endeavor. And BSX and Johnson & Johnson [JNJ
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]sell the older products Taxus and Cypher, respectively.
Studies show Xience/Promus work better and may be safer than the other stents and doctors apparently think the new products are easier to insert than the older ones.
Weinstein says, "Boston's (Scientific) marketing of Promus...has turned out to be much more aggressive than expected. The result has been higher Promus uptake, higher Xience uptake, and a rapid drop-off for the existing products."
But Weinstein points out that BSX could be a victim of its own success because it buys the new stents from ABT and then slaps the Promus name on them. "Boston's challenge is that it may not have enough Promus to continue to grow its share within the market. Under the Abbott agreement," he writes, "Boston (Scientific) must forecast and pre-order its supply for each six month period with 3 months of the supply fixed and 3 months variable. Boston can increase its order monthly, but each month there are caps on how much it can raise its order." Interesting.
A lot of disclosures: Someone at JPM is a Director of ABT. A Director of JPM is also a Director of JNJ. JPM has done and wants to do more investment banking for ABT, MDT, JNJ and BSX. And part of JPM makes a market in MDT options. Some readers wonder what's up with the disclosures. CNBC editorial policy requires us to include them in our coverage. You'll also see them in graphics when analysts and money managers appear on CNBC. They were mandated by the SEC to be added to the fine print at the end of research notes following the analysis scandal earlier this decade (i.e. Jack Grubman) to give investors a clearer view of potential conflicts.
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