For yet another quarter, Boston Scientific
Though sales of the Taxus drug-coated stent increased on a year-over-year basis, sales were sequentially lower on both a worldwide and a U.S. basis. That's not unusual, though, so investors shouldn't read too much into that performance. Importantly, Taxus' market share is staying more or less stable, with Boston Scientific controlling about 60% of the U.S. market for drug-coated stents and Johnson & Johnson's
Now, a strong drug-coated stent franchise is all well and good, but I believe that Boston Scientific will need to start delivering some sort of second act. Boston Scientific has good R&D people and has spent a lot of money over the years buying small, development-stage med-tech companies. It's time for some of those efforts to emerge and carry their own weight.
There's nothing wrong with starting out as basically a one-product company, employing what I call the "Snow White and the Seven Dwarfs" model. Many companies, such as Medtronic
In my view, that's the real kicker for Boston Scientific. If drug-coated stents have more or less caught up to the market, further growth will be a hard slog of market share gains and physician education.
Buying Boston Scientific shares today is, in my view, basically a bet that future R&D will pay off for the company. The company has a great drug-coated stent, and I'm sure that its Liberte stent will be a big success as well, assuming that litigation with Johnson & Johnson over the stent is settled. But I still believe that if Boston Scientific is to get the valuation of a stalwart grower and thus turn into a long-term winner, it needs to find another significant source of profits beyond just drug-coated stents.
For more takes on Boston Scientific and other stent makers:
- Stent Wars: Jury Strikes Back
- Stent Wars: Revenge of the Bypass
- Stent Wars 2: The Market Share Menace
- Stent Success Propels Boston Scientific