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Revised Label for BSX Defibrillators

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Boston Scientific Corporation (BSX) has received revised labeling from the US Food and Drug Administration (“FDA”) for its Incepta, Energen, Punctua, Cognis and Teligen implantable cardioverter defibrillators (ICDs) and cardiac resynchronization therapy defibrillators (CRT-Ds). The revised labeling increases the longevity projection for these devices indicating that some ICDs may last for more than ten years and almost eight years for some CRT-Ds.

Recently, data presented at a meeting in Boston demonstrated that treatment with defibrillator benefits patients for a median follow-up of 11 years.  Besides, it has been observed that a defibrillator may extend a patient’s life (New York Heart Association Class II patients) for at least a decade by saving him from sudden cardiac death. Reduced frequency to replace these devices will help patients by reducing complications associated with the procedures as well as involve financial benefit.

Boston Scientific had received FDA approval for Incepta, Energen and Punctua CRT-Ds and ICDs in November 2011. CE Mark approval for these defibrillators was received in the second quarter of 2011. The rollout of these products is currently underway in the US market and feedback from customers has been positive so far. 

Boston Scientific’s focus on portfolio expansion is inevitable in the face of severe headwinds in its core segments of stents and defibrillators. Other players in the medical devices space such as Medtronic (MDT) and St Jude Medical (STJ) are also resorting to various alternatives to revive their flagging top line.

The company’s focus on portfolio expansion is yielding results with several product approvals. Last month, the company received FDA approval for the Epic vascular stent, which is meant to open blocked arteries in patients with iliac artery stenosis. The FDA approval of the Epic vascular stent comes on the heels of CE Mark approval and subsequent launch of Innova self expanding bare metal stent. The Innova stent is designed to treat peripheral vascular lesions in arteries above the knee.

Some of the other significant products in the company’s pipeline include the fourth generation Synergy drug eluting stent (CE Mark expected in late 2012 with full launch in 2013) and Vercise deep brain stimulation program for the treatment of Parkinson's disease. Both these technologies are expected to contribute to revenues from 2013 and incrementally in 2014.

We have a Neutral recommendation on Boston Scientific. The stock retains a Zacks #3 Rank (hold) in the short term.

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