Medical device maker Boston Scientific (NYSE:BSX) handily beat Wall Street estimates when it reported a 38% earnings increase. The highlight was the success of its Taxus coronary stent. Blockbuster news could be on the horizon.

A stent is a wire mesh that keeps open surgically cleared arteries. One of the limitations of bare metal stents is that 30% of patients develop scar tissue that can cause re-blockage. Boston Scientific sells a drug-coated stent in Europe that limits this scarring from occurring.

The future for stents is bright. Boston Scientific believes its 2005 stent market opportunity is 50% of a $5 billion market. When you have total sales of $876 million in the latest quarter, this potential is a rare opportunity.

The Taxus drug-coated stent achieved a number of milestones in the latest quarter. Sales were up 100%. European sales exceeded those of the only other drug-coated stent on the market -- Johnson & Johnson's (NYSE:JNJ) and managed a 65% market share. That increases to 70% in all international markets.

Taxus, unlike Cypher, is not sold in the U.S. An FDA advisory panel review is scheduled for November 20. With a panel recommendation, full FDA approval could be expected in the first quarter 2004 according to the company.

The news is not all good for Taxus. J&J has raised patent issues and is seeking an injunction in U.S. District Court in Delaware. Guidant (NYSE:GDT) and Medtronic (NYSE:MDT) are also developing drug-coated stents for possible 2005 introduction. J&J has an improved Cyper product scheduled for mid-2004.

However, where J&J and Boston Scientific go head-to-head, Boston Scientific wins the market-share battle. Boston Scientific sells its product for less and claims it is easier for doctors to use.

With sales last year of $3 billion, and its business expected to grow in the mid-teens without the U.S. coated stent market, there's a lot to like about Boston Scientific. But the potential of $2.5 billion in drug-coated stent sales in 2005 will likely propel the stock higher still if FDA approval is granted early next year.

Those looking for a riskier way to play this possibility might consider pharmatherapeutics company Angiotech (NASDAQ:ANPI). Angiotech will receive an 8% royalty on Taxus sales. Having completed a $251 million sale of 5.75 million shares, the company has sufficient cash for current projects and could stand to gain a generous income source inTaxus.

W.D. Crotty owns Boston Scientific and had a cardiac catheterization yesterday. His doctor and attending nurse, both J&J shareholders, were amused to be using a J&J Cypher stent. Questions and comments to HawaiiFool@hawaii.com.