Originally Published MDDI May 2005
|Although Boston Scientific's Taxus stent was second to market, the company gained brand conversion by showing
its customers the costs and benefits of using the product.
At the American College of Cardiology conference in March, Boston Scientific Corp. (Natick, MA) was touting the remarkable adoption rate for its Taxus drug-eluting stent. By the company's count, Taxus gained a majority of U.S. market share within a few months of launch. But for many new devices, rapid adoption is a tough challenge. Can the rest of the device industry learn from the success of Taxus? Or is it simply a unique product in a unique market?
In some respects, the Taxus situation is one of a kind. But it still has much to teach the industry. “Adoption is really two topics: category adoption and brand conversion,” says Eric Simso, Boston Scientific's vice president of marketing. Boston Scientific was fortunate because the first product to market, Cypher from Johnson & Johnson's (J&J's) Cordis Corp. (Miami), had pretty much taken care of category adoption. J&J's data showed Cypher provided a remarkable improvement in restenosis rates, compared with bare-metal stents. J&J had also attained reimbursement from the Centers for Medicare and Medicaid Services before Cypher even had FDA approval. By the time Taxus came onto the market, the technology had already won over cardiologists, who knew that they could get reimbursed for using it.
The hard part was brand conversion. That is where Boston Scientific's practices could be templates for other device companies.
The challenge was tough because Taxus was second to market, and the available data did not show any major differences between its performance and that of Cypher. Boston Scientific had to do whatever it could to differentiate its product.
First, sensing a possible area of weakness for its competitor, it made the bold decision to develop manufacturing capacity large enough to supply 75% of world demand. Bottlenecks in J&J's manufacturing process and supply chain had made it tough to make enough Cypher stents and get them out fast enough. Based on that, Boston Scientific bet that customers would appreciate Taxus more if it were manufactured and delivered more quickly. That hunch turned out to be right. “We risked tens of millions and it brought us hundreds of millions,” says Simso.
Second, Boston Scientific decided to offer a simple, transparent pricing program. Complex pricing programs can be intimidating and off-putting. Boston Scientific thought a simpler program would help customers become more at ease with the sales representatives and, ultimately, more enthusiastic about the product. “We had one chart that said ‘this is where you fall [in terms of volume of all products bought from Boston Scientific], and so this is the price',” says Simso. “They were not going to catch us playing pricing games across town or across the state. We made it easy for them to do business with us. Maybe we sometimes left dollars on the table, but we made up for it with loyal customers. [Such pricing] may not be possible for capital equipment, but for all other devices, the transparency and simplicity of the deal is very important.”
Third, the company sensed from clinical trials that doctors would find Taxus easier to use than Cypher. It told its sales representatives to mention the issue but not to push that angle too hard. “The reason is that when you use the product, you can tell almost immediately,” Simso says. “Delivering and handling a stent system is such a tactile thing. A cardiologist's hands are going to tell him or her much more than any of our tests would. If [the stent] doesn't measure up for a specific customer, the reps might lose overall credibility with that customer if they pushed the deliverability issue too much.”
These points have a common theme: Make it easy for your customers to understand the costs and benefits of your products, and deliver what you promise.
How well will these practices hold up for Boston Scientific? We may learn that soon. The next phase of the Cypher-Taxus marketing battle began at the March conference when J&J announced results of the first head-to-head trial of the two products. J&J reported that Cypher showed better late loss and less risk of thrombosis. Boston Scientific said the study showed the products were virtually equal by almost every metric, and that the late-loss difference was something it already knew about and had disclosed. The company disputed the finding about thrombosis, however.
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