War has been declared.
The combatants: medical device heavyweights Medtronic
The weapons: Drug-coated (also called drug-eluting) stents.
The target: The clogged arteries of your heart.
The stakes: A U.S. market worth at least $4 billion.
Of course, Boston Scientific and Johnson & Johnson were so gauche as to start the fight before Medtronic was ready. So while Medtronic is still working on the clinical trials to get Food and Drug Administration approval, J&J and Boston Scientific have been beating each other silly for market share for some time now. While J&J captured the early lead (not so hard to do when you're the first on the market), Boston Scientific came roaring back and holds about two-thirds of the market.
Last weekend, more data was presented at the American College of Cardiology (one of the preeminent medical meetings -- think Woodstock for cardiologists) pertaining to drug-coated stents, and this data suggests that the battles are far from over.
People were paying particular attention to two studies -- one from J&J that hoped to show superiority over the Boston Scientific stent, and the other from Medtronic just hoping to show enough efficacy to get into the game.
For Johnson & Johnson, the results were bad news touched with a silver lining. Although the study failed to show that Cypher (J&J's stent) was any better than Taxus (Boston Scientific's stent), it did suggest that the Cypher was just as easy to deliver.
Deliverability is a big deal in the stent world -- placing a stent requires inserting it into the femoral artery (in the groin) and threading it through the body up into the heart. While this isn't quite as hard as it sounds (though it's by no means easy), a stent that is hard to deliver can make the whole process much more time-consuming and aggravating.
Despite the general perception that the Cypher and Taxus stents were clinically equivalent, Taxus gained so much of its market share due mostly to the perception that its stent was easier to deliver. With this new study, Johnson & Johnson perhaps has an opportunity to regain some ground.
For Medtronic, the results for its Endeavor stent were quite good. While it can be tricky and misleading to compare clinical trials, I believe it's pretty safe to say that the Medtronic stent is at least equivalent to Cypher or Taxus, and may in fact be better. Though the company expects to begin selling the Endeavor in Europe in 2005, U.S. approval isn't likely until at least 2006.
Whither the market goest?
In the short term, Johnson & Johnson and Boston Scientific are going to continue to go at each other like sugared-up kids at a Whac-A-Mole game. With clinical efficacy (and deliverability) essentially equal, the game turns to marketing -- whose sales force can better impress the customer and who can bundle together the most attractive package of freebies and throw-ins to lower the total cost to the user.
Once Medtronic enters the market in 2006 or so, the same will be true. Clinical efficacy won't matter nearly as much as marketing prowess. And on that score, given Johnson & Johnson and Boston Scientific's lead, Medtronic may find it difficult to push its way in to the market without discounting.
Luckily, there are numerous angles for Fools to explore on their own. Not only does each player offer something different -- J&J is a global health-care colossus, Boston Scientific has the most leverage to stents, Medtronic has a broad range of growing device businesses -- but ride-along opportunities like SurModics
Fool contributor Stephen Simpson owns shares of Johnson & Johnson.