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Analysts Expect a Rebound in Drug-Eluting Stent Sales

Although many medtech market observers once viewed drug-eluting coronary stents as being on a trajectory for continued growth, sales of the products declined significantly in the final quarter of 2006. Boston Scientific Corp. (Natick, MA) reported that fourth-quarter revenues from its Taxus drug-eluting stent were $506 million, down almost 20% from $606 million in the year-earlier quarter. Similarly, Cordis Corp. (Miami Lakes, FL), a Johnson & Johnson company, reported that fourth-quarter sales of its Cypher drug-eluting stent fell 15% to $580 million. Taxus and Cypher are currently the only FDA-approved drug-eluting stents on the market.

The sales falloff is generally attributed to concerns arising from recent clinical studies, some of which indicated a significantly higher incidence of late-term thrombosis with drug-eluting stents than with their bare-metal counterparts. The findings were initially reported last September at the 2006 World Congress of Cardiology in Barcelona, Spain. However, studies reported at the annual Transcatheter Cardiovascular Therapeutics conference in October and a meeting of FDA's circulatory system devices advisory panel in December generally concluded that the risk of blood clots associated with drug-eluting stents was within acceptable limits and that the devices were safe and effective when used as intended by the manufacturer.

Straube

However, the latter findings have apparently done little to quell the anxieties of patients, physicians, and hospitals when it comes to the use of drug-eluting coronary stents. Prior to the reports of potential blood clots, the devices accounted for 85-90% of all coronary stents implanted in the United States. Most analysts estimate a current usage rate of 70-75%.

Adding to the gloomy climate for the devices, news recently began to circulate that the Centers for Medicare and Medicaid Services (CMS; Baltimore) was about to review its reimbursement coverage of drug-eluting stents. The report initially appeared in the Wall Street Journal and was picked up by numerous industry and business news services. Most analysts disputed the report, and both Boston Scientific and Cordis said they were unaware of any scheduled coverage review by CMS.

Responding to the speculation regarding a coverage review, Barry Straube, MD, chief medical officer at CMS, said, "There is no plan for any change in current policy toward drug-eluting stents at the present time." However, he added that CMS is always assessing whether new evidence about a medical technology warrants the agency's attention.

Gunderson
Analyst Gunderson: Time will tell.

Although sales of drug-eluting coronary stents have taken a significant hit, most analysts see little--if any--permanent damage to the category. Many expect that, with time, next-generation products already in the pipeline will stimulate growth over the long term.

Thomas Gunderson, a managing director and senior medtech analyst at Piper Jaffray & Co. (Minneapolis), says he does not see any signs of a comeback just yet. "The probability of a recovery is high, but it may take a year or more to get back to an 80-85% usage rate," he says.

Gunderson says he expects manufacturers of next-generation stents to pay greater attention to long-term data, to emphasize the products' use with anticoagulant drugs, and to provide additional safety features and demonstrable clinical benefits.

Wald
Analyst Wald: Off-label setbacks.

Jan Wald, PhD, a medtech analyst with A.G. Edwards Inc. (St. Louis), also sees some recovery for drug-eluting stents on the horizon. Nevertheless, "they may never get back to an 85% share," he says. "Considering the alleged widespread off-label use of the stents--which may have been a contributing factor in the increased incidence of blood clots--physicians and hospitals are now more likely to closely adhere to the manufacturers' guidelines when implanting drug-eluting stents. Ultimately, that could hold down the numbers."

Wald also says that new drug-eluting stents--such as the CoStar from Conor Medsystems (Menlo Park, CA), which uses a bioabsorbable polymer to hold its drug--will be well received by cardiologists. J&J's Cordis recently acquired Conor.

Wald says other advanced stent designs on tap for market entry in 2008 and beyond will further restore physician and patient confidence in the category. Abbott (Abbott Park, IL) has a new bioabsorbable drug-eluting stent in development that is made of polylactic acid and is designed to be fully absorbed and slowly metabolized by the coronary artery.

Best
Boston Scientific's Best: The best is yet to come.

Despite the sales slump, drug-eluting stent manufacturers received some promising news earlier this month when a study conducted at Wake Forest Medical School (Winston-Salem, NC) found that the devices showed substantially lower rates of death, heart attack, and the need for repeat procedures in patients when compared with bare-metal stents.

In forecasting recovery for drug-eluting stents, many analysts point to a similar sales setback that occurred in the cardiac rhythm management (CRM) market following the recall of nearly 300,000 pacemakers and implantable cardioverter defibrillators (ICDs) manufactured by Guidant, which is now part of Boston Scientific. While sales of drug-eluting stents declined in the fourth quarter of 2006, noteworthy recovery was seen in sales of pacemakers and ICDs. To promote further recovery and additional growth, Medtronic Inc. (Minneapolis) has launched a $100 million campaign with direct-to-consumer television ads promoting its ICDs.

Larry Best, Boston Scientific's chief financial officer, is not hesitant to predict a similar full recovery in the drug-eluting stent market. During a conference call with analysts, Best said, "I think we're moving in the right direction. I don't think anybody on Wall Street is going to believe us, but internally we actually think our best year on drug-eluting stents is ahead of us, not behind us."

© 2007 Canon Communications LLC

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