Doctors Want Boston Scientific's Novel S-ICD System, But Supply Problems Hampering Launch

Boston Scientific is failing to meet demand for its novel subcutaneous ICD product which has no leads in the heart.

April 25, 2013

3 Min Read
Doctors Want Boston Scientific's Novel S-ICD System, But Supply Problems Hampering Launch

The S-ICD system with no leads in the heart

When Boston Scientific announced its acquisition of Cameron Health in early 2012, it proclaimed that Cameron's subcutaneous ICD device with no leads in the heart was a disruptive innovation in the market.

Right now, however, the only disreuption there is, Boston Scientific's sales. Demand for the product is outstripping supply, and even in a controlled, limited launch, Boston Scientific cannot immediately deliver the S-ICD system to customers.

In a conference call with analysts to discuss its first-quarter financial results Thursday, CEO Mike Mahoney said that the company will only be able to supply a limited number of S-ICD products in the second quarter.

"During the first quarter, sales exceeded our internal global forecast and demand has outpaced our ability to supply," he said, adding that since March the company has been constrained by supply issues. 

The company is working to expand manufacturing capability and expects to resume sales, as part of the controlled launch, in the summer. Once the next generation product of the S-ICD product launches in the fourth quarter, the supply problems should fade, Mahoney noted.

It's not clear why the company is experiencing such a supply glitch, especially if it believed its own hypothesis that the product would revolutionize the ICD space. Mahoney did mention that the approval from the FDA last fall came earlier than expected. In announcing the acquistion, the Massachusetts device had said that it FDA approval would come in the first half of this year.

A spokesman for the company did not address an email inquiry into the cause of the shortage and whether Boston Scientific anticipated it, except to repeat Mahoney's comments about how the company is working to mitigate supply challenges.

While Boston Scientific's CEO provided anecdotal evidence that sales of the product bested the company's own internal projections, executives were reluctant to be more specific. When Kristen Stewart, an analyst with Deutsche Bank, requested details about how much the S-ICD product actually contributed to the first quarter ICD-sales to get a sense of how the core ICD business was doing, CFO Jeffrey Capello flatly declined. 

"We're not got going to get into the details of each product line," Capello said. "As Mike [Mahoney] mentioned in his comments, we had a very strong result for the first quarter in our CRM business despite the fact that we weren't on the market much with the S-ICD device."

Overall, in the quarter ended March 31, Boston Scientific revenue dropped 6 percent to $1.76 billion from $1.87 billion in the same period a year ago. The company had a loss of $354 million or 26 cents per share in the quarter, from a profit of $113 million, or 8 cents per diluted share. In the quarter, Boston Scientific took a $578 million charge for reorganizing the company to three global operating units - Cardiovascular, Rhythm Management and MedSurg - as well as for litigation expenses.

-- By Arundhati Parmar, Senior Editor, MD+DI

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