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Boston Scientific to Drop Guidant Brand
June 1, 2006
4 Min Read
Although the company has not issued an official statement on the issue, Boston Scientific Corp. (Natick, MA) has acknowledged that it plans to phase out the Guidant brand. The move toward eliminating the brand began on April 24, just days after Boston Scientific finalized its $27 billion acquisition of Guidant Corp. Removing all vestiges of the troubled Guidant brand from manufacturing facilities, devices, packaging, advertising, Web sites, and related company literature and materials will reportedly take two to three years.
Boston Scientific's decision was very much in evidence at the recent Boston meeting of the Heart Rhythm Society (HRS; Washington, DC) where more than 6000 cardiac specialists saw Boston Scientific banners displayed throughout the convention hall. Although the banners included a small Guidant logo, even that acknowledgment is expected to be phased out before year's end.
Boston Scientific CEO James Tobin, who was a highly visible presence at the company's HRS booth, spoke openly about the need to move forward: “Guidant has made some mistakes, which they readily acknowledge, and we need to repair our credibility with our customer base.” Tobin said that unified branding was just one step in the integration of the two companies, but an important one.
As part of its public relations blitz related to the acquisition and subsequent phasing-out of the Guidant brand, Boston Scientific took out advertisements in several medical journals and in 30 newspapers around the world, including those serving the Congressional and regulatory readership in Washington, DC. Boston Scientific ads were also featured at Fenway Park, home of the Boston Red Sox baseball team, and in the Minneapolis Metrodome, current home of the Minnesota Twins baseball and Minnesota Vikings football teams. In addition, employees attended corporate communication events touting the combined company's new “We can and we will” campaign, which seeks to emphasize its core strengths for both recovery and continued growth.
The Guidant brand dates back to 1994, when Eli Lilly and Co. (Indianapolis) spun off its medical device division into a separate company. During the next decade, the company logged an extraordinary record of technological achievement and revenue growth, making it a prime takeover target when former president and CEO Ronald W. Dollens announced his intent to retire. But since June 2005, Guidant has recalled or issued safety warnings for nearly 300,000 CRM devices, including both pacemakers and ICDs. These actions are expected to generate product liability suits for years to come.
While most industry analysts view the decision to phase out the Guidant brand as a positive move, many have also noted that the brand is still highly regarded by both cardiologists and electrophysiologists. Most physicians in the field recognize that cardiac pacemakers and implantable cardioverter defibrillators (ICDs) are sensitive, sophisticated electronic devices that will malfunction from time to time in a small number of cases. It's generally acknowledged that Guidant's problems resulted less from faulty technology than from the company's failure to disclose information about potential problem products in a timely fashion.
“Phasing out the Guidant brand makes sense,” says Jan Wald, medical technology analyst with A. G. Edwards Inc. (St. Louis). “Boston Scientific had already embarked on a ‘master brand' strategy, and hanging on to the Guidant brand would have been confusing. They're not Johnson & Johnson, and they were not about to set up divisions like Cordis and DePuy.”
Wald offers a close-up perspective on the cardiac rhythm management (CRM) sector. Prior to embarking on a career as a medtech analyst, he managed clinical programs as well as the development of algorithms and software for Guidant ICDs. “Boston Scientific wants to be identified as a full-featured cardiovascular firm,” says Wald. “That's why they pursued the acquisition of Guidant—including their successful late entry bid to wrest it away from J&J.”
Guidant no longer exists as a corporate entity. Its former Indianapolis headquarters will become a regional sales office for Boston Scientific. According to a spokesperson, major employee reductions are “not expected.” Prior to the acquisition, most of Guidant's employees were located in Arden Hills, MN; Santa Clara, CA; Clonmel, Ireland; and Dorado, Puerto Rico.
Boston Scientific, with a combined workforce of 27,000 and projected annual sales of $10.2 billion, has now eclipsed Medtronic Inc. (Minneapolis) as the world's largest manufacturer of cardiovascular devices.
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