Is Abbott on the Verge of a Medical Device Goldmine?

Here's why medical devices may not be the worst performing part of Abbott's business in the future.

Chris Newmarker

When Abbott announced its second-quarter results this week, medical devices were not the star of the party. The Abbott Park, IL-based company's medical device business saw only a 3% year-over-year growth in sales, even while overall sales grew 10.8% operationally.

Abbott's medical device business, however, may be due for a Cinderella moment, if a new report from research and consulting firm GlobalData is any indication. The key for Abbott is bioabsorbable scaffolds.

Unlike metallic stents, bioabsorbable scaffolds are temporary. As with stents, they open a blood vessel and restore blood flow, but then the scaffolds dissolve, theoretically keeping vessels more flexible and free from being caged in as they would be with stents.

The market for such scaffolds is expected to expand rapidly from $143.7 million in 2014 to $2.1 billion in 2021--representing a compound annual growth rate of 42.1% worldwide, according to London-based GlobalData. Reasons include new product approvals and what GlobalData describes as a paradigm shift toward minimally-invasive procedures to treat vascular diseases.

It turns out that Abbott is a leader in the space with its drug-eluting Absorb BVS that is available in the European Union and in select Latin American and Asian countries.

"Abbott Vascular recently gained the CE Mark for a package incorporating both Absorb BVS and the company's state-of-the-art catheter delivery system, the GlideTrack. This package is expected to increase the uptake of the Absorb BVS system, as it addresses clinical concerns surrounding the delivery of its device to occluded coronary vessels," Amen Sanghera, GlobalData's analyst covering medical devices, said in a news release.

Sanghera noted that technological trends in the market are aimed at reducing the thickness of bioabsorbable scaffolds and providing better delivery systems, more efficient drug-elution characteristics, and faster resorption time. "The expanding presence of BAS products, along with a reduction in their prices, will drive substantial growth during the forecast period," Sanghera said.

In the past quarter, Abbott completed regulatory submissions in the U.S. and Japan for the Absorb stent. During a Wednesday earnings call, CEO Miles White declined to discuss where things are with the Absorb III trial of the device. But Global Data is predicting U.S. approval of the Absorb by next year.

White said he is happy that sales growth in Abbott's vascular business is accelerating, even if it is expected to remain in the low single digits in the near future.

"I like the direction we're headed here, and frankly, I like the direction we're headed with the breadth of the business, the next-generation products in the business across the board, and not just in the stent business, but other aspects of the whole Vascular franchise," White said during the call, which was transcribed by Seeking Alpha.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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