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Here's How Boston Scientific Lost its Commanding Position in its ICD Business at a U.S. hospital to St. Jude Medical

Boston Scientific made some missteps that saw its ICD share at Rush University Medical Center in Chicago plunge in the last year and a half.

Some analyst reports are a gold mine of information providing insight into places that are darker than a black hole.

Here's a story about Boston Scientific and what happened with its ICD/pacemaker business at Rush University Medical Center, a teaching hospital in Chicago. 

 

A year and a half ago, Boston Scientific commanded roughly 90 percent of that hospital's ICD/pacemaker business. But it made a bad tactical move after the FDA approved its novel sub-cutaneous ICD that has no leads in the heart. Boston Scientific acquired this technology when it bought Cameron Health in 2012.

The FDA approval in hand, the Natick, Massachusetts company began to tell Rush University electrophysiologists that the University would have to pay more for its ICDs if they wanted to use the new subcutaneous ICD product. Here's what Glenn Novarro, senior analyst covering medical devices at RBC Capital Markets, wrote in a recent report about this attempt.

"...with the FDA approval of the Sub-Q ICD, BSX attempted to negotiate higher ICD pricing in return for access to the Sub-Q ICD. This negotiating tactic did not sit well with the EPs, and BSX was essentially removed from the lab," he wrote.

But this was only one of the reasons why a year and a half later, Boston Scientific is clinging on to 1 percent share at the hospital, a position it shares with Biotronik, a much smaller player in the ICD space in the U.S. market.

The company's account servicing is also dismal. Electrophysiologists at Rush look at implant technology, pricing, relationships with firms and account service in making decisions about contracts. Novarro wrote that "service and sales force relationships still matter with EPs, and BSX was lacking in both categories. The EPs were critical of BSX sales management, the quality of reps, and high rep turnover."

Ouch. 

And into this vacuum stepped in St. Jude Medical which now has 80 percent share, followed by Medtronic at 18 percent. And the funny thing is that products from these two companies are not necessarily superior to those of Boston Scientific.

"We did not get the sense that the STJ/MDT sales teams were significantly better, but when the product offering across all vendors is similar, a marginally better sales team can be the difference between winning or losing business," he wrote.

Can Boston Scientific redeem itself? ICD contracts at the hospital are renewed every two to three years, so that remains to be seen.

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

A previous version of the story left out the analyst's name.

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