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BSX Precision System Now in U.S.

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In a major boost to its growing neuromodulation business, medical device major Boston Scientific Corporation (BSX) gained the U.S. Food and Drug Administration (:FDA) approval for its Precision Spectra Spinal Cord Stimulator (SCS) System. Following the regulatory approval, the company initiated a limited market launch of the system. Earlier in 2012, Boston Scientific had won the CE Mark approval in Europe for this system.

Boston Scientific is a major player in the market for rechargeable SCS devices. The Precision Spectra System is the first and only SCS system in the world with Illumina 3D software and 32 contacts.

The approval and subsequent commercialization of the company’s lead pipeline candidate for the SCS business line is an upside for Boston Scientific. This will strengthen Boston Scientific’s pain management portfolio under the neuromodulation business unit.

Potential Market

The Precision Spectra System is expected to provide pain relief for patients suffering from chronic pain. Considering that more than 100 million individuals in the U.S. suffer from chronic pain, the company’s latest system will serve a sizeable market.

Exiting 2012, Boston Scientific approximated the global market for SCS at $1.4 billion. Further, the company expects CAGR of 6% for the market through 2017. Since chronic pain can have a destructive impact on the quality of life, the company constantly works to improve the quality of life for patients suffering from chronic pain.

Boston Scientific continues to focus on clinical studies to improve its portfolio that serves the need of patients suffering from chronic pain as it works to cater to a broader spectrum of patients. For this purpose, the company initiated the two more trials – OPTIONS Trial and MAP Trial. While the OPTIONS Trial focuses on the benefits of the Precision Spectra System, the MAP Trial will study the prevalence of multiple areas of pain in SCS-eligible patients with certain diseases.

Other Developments

Apart from the regulatory approval of Precision Spectra System in the U.S., Boston Scientific recently enhanced its neuromodulation portfolio in Europe as well in the U.S. with product approvals and expanded indications. The company had been awarded the peripheral nerve stimulation and head-only MRI conditional CE Mark for the Precision Plus SCS System in Europe. Boston Scientific’s Infinion 16 Percutaneous SCS Lead won the regulatory approval in the U.S. as well as Europe.

Boston Scientific also gained the European approval for Vercise Deep Brain Stimulator System for Parkinson’s disease. With a million American adults suffering from Parkinson’s disease, the market in the U.S. remains largely underpenetrated.

Our Take

As Boston Scientific continues to face softness in its core segments, its focus on portfolio expansion for MedSurg franchise is encouraging. The expansion of pipeline in high growth avenues should fuel growth going forward.

Boston Scientific recently updated its growth objective with significant new additions. We believe that a fresh take on growth objectives after a period of pressurized core business by new management will lead to a turnaround. However, as of now, we prefer to remain on the sidelines until further visibility is obtained in this regard.

As a result, the stock carries a Zacks Rank #3 (Hold). Other stocks in the medical sector that warrant a look are Cepheid (CPHD), Cyberonics Inc. (CYBX) and Conceptus Inc. (CPTS), carrying a Zacks Rank #1 (Strong Buy).

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