And Then There Were 4

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This year started with just two players in the U.S. drug-eluting stent market -- Johnson & Johnson (NYSE: JNJ) and Boston Scientific (NYSE: BSX) -- but now the number of competitors has doubled with the addition of Medtronic's (NYSE: MDT) Endeavor in February and Abbott Labs' (NYSE: ABT) Xience V last week.

The market's reaction was ho-hum -- lifting Abbott less than 1% in Thursday's short trading day. That's what happens when FDA approvals are widely expected after positive advisory panel meetings. But now the fun begins, because we get to see exactly how well the four can compete with each other in a market that's severely shrunk from its heyday.

Medtronic was able to capture an estimated 20% of the U.S. stent market in its first quarter on the market, but I'm not sure if the head start on Abbott is really going to help all that much. Interventional cardiologists are notorious for wanting to try new gadgets -- hence Medtronic's quick market penetration -- so Abbott shouldn't have any problems getting them to try out the Xience.

The competition gets even more complex because the terms of the breakup of Guidant, which sent the Xience to Abbott, allow Boston Scientific to sell the Xience stent under the brand name Promus. It'll be interesting to see how Boston Scientific handles the option of pushing its older Taxus versus the shiny-new Promus. Since it'll have to ship royalties over to Abbott on sales of Promus, you'd think that Boston Scientific's sales reps would want to push the Taxus. But the Xience/Promus beat the Taxus in a head-to-head trial, so the sales reps may not have much of a choice on which one to push.

How much is Abbott going to be able to make off its new stent? I figure it can sell more than Medtronic's run rate of about $325 million per year, but it probably won't come close to taking enough market share to match Boston Scientific's $1 billion in U.S. sales last year -- at least not in its first year on the market. Given that Abbott had almost $26 billion in revenue last year, the sales will be a nice addition, but they won't send the top line to the moon any time soon.